Oil prices edged up on Friday as traders continued to assess potential supply-side risks, even as the likelihood of a U.S. military strike on Iran appeared to diminish.
Brent crude rose 5 cents, or 0.1%, to $63.81 a barrel, while U.S. West Texas Intermediate added 8 cents, or 0.1%, to $59.27 a barrel by 0749 GMT.
Earlier in the week, both benchmarks climbed to multi-month highs after protests intensified in Iran and U.S. President Donald Trump hinted at possible strikes against the country. Despite some easing since then, Brent remained on course for a fourth consecutive weekly increase.
“Given the potential political upheaval in Iran, oil prices are likely to experience greater volatility as markets digest the potential for supply disruptions,” BMI analysts said in a note to clients.
Late on Thursday, Trump said that Tehran’s crackdown on protesters appeared to be easing, which helped calm fears of military action that could threaten oil supplies.
“While (Iranian supply) risks have eased somewhat, they remain significant, keeping the market nervous in the short term,” IG analysts said in a client note.
“Any escalation with Iran will also raise concerns about potential disruption to oil flows through the Strait of Hormuz, a chokepoint where around 20m b/d passes,” they added.
Even so, analysts remained cautious about the broader supply outlook for the rest of the year, despite earlier expectations from OPEC that the market would remain balanced.
“Sentiment is driving markets, but the impact of headlines is always short-lived, especially when fundamentals look comfortable in the backseat,” said Phillip Nova senior market analyst Priyanka Sachdeva.
“Despite the steady drumbeat of geopolitical risks and macro speculation, the underlying balance still points to ample supply … unless we see a genuine revival in Chinese demand or a meaningful bottleneck in physical barrel flows, oil looks range-bound, with Brent broadly hovering between $57 and $67.”
On Wednesday, OPEC said global oil supply and demand are expected to stay balanced in 2026, with demand growth in 2027 projected to match this year’s pace.
Looking ahead, market participants expect near-term price action to remain driven by geopolitical developments and macroeconomic signals.
Immediate catalysts for the oil market are likely to include developments in Iran and the release of key Chinese economic data next week, said OANDA senior market analyst Kelvin Wong, who added that WTI crude is expected to trade sideways in the near term within a $55.75 to $63.00 per barrel range.
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