Oil set for strong weekly gains despite muted trading as Middle East risks persist

Oil prices posted modest gains on Friday, with both Brent and West Texas Intermediate on course for their strongest weekly advance in months as geopolitical tensions between the United States and Iran continued to support the market.

At 04:10 ET (08:10 GMT), Brent crude futures were up 0.2% at $84.38 a barrel, while U.S. West Texas Intermediate (WTI) crude added 0.6% to $78.71 a barrel.

Although price movements were relatively limited during Friday’s session, both benchmarks remained on track to gain more than 10% for the week after the latest military escalation injected a significant geopolitical premium into crude markets.

Tamas Varga, an analyst at PVM Oil Associates, said “there is a lack of urgency in oil circles at present.”

He added: “There have been some quite significant developments without which the experience of the last few months would have crude prices harrying triple digits.”

Iran’s armed forces announced new strikes against U.S. military facilities across the Middle East early Friday, including what officials described as the country’s first direct attack on Syria.

The latest retaliation followed a sixth straight night of U.S. military operations targeting Iranian military infrastructure.

Concerns remain centred on the Strait of Hormuz, the strategic shipping route that carries roughly 20% of global oil supplies. Shipping traffic has slowed again following the renewed U.S. naval blockade of Iranian ports.

Market participants continue to assess whether supply interruptions could become prolonged or whether increased production elsewhere would help offset any disruptions.

Diplomatic initiatives remain active, with reports indicating that Qatar, Egypt and Pakistan are still attempting to revive negotiations despite the apparent collapse of June’s ceasefire agreement.

Meanwhile, recent U.S. inventory figures continued to support prices.

The Energy Information Administration (EIA) reported a decline of 1.7 million barrels in crude inventories during the week ended July 10, bringing total stockpiles to 409.7 million barrels. Gasoline inventories also fell by 1.5 million barrels.

Earlier data from the American Petroleum Institute (API) showed a draw of around 564,000 barrels in crude inventories over the same period, below analysts’ forecasts.