Middle East Diplomacy Drives Oil Prices Higher Amid Supply Disruption Concerns

Markets were relatively quiet on Friday, with traders focused on the latest developments in Middle East diplomacy rather than fresh economic data. The calm macro calendar allowed investors to pay close attention to whether ongoing talks could reduce the risk of an energy shock.

Iran's foreign minister Abbas Araqchi stated that his country would not restart direct talks with the US under the June memorandum of understanding, and linked any reopening of the Strait of Hormuz, a key oil-shipping route, partly to the US paying for conflict damage. This stalemate is typically reflected in oil prices first: front-month Brent rose 1.6% to about $84.85 a barrel, while US crude WTI was up 1.7% to $79.49.

The modest move in oil prices matters because higher crude can flow into fuel costs for businesses and, if it sticks, can nudge near-term inflation expectations just as corporate earnings roll in. This is particularly relevant for fuel-intensive industries like airlines, shipping, and heavy transport, where profit margins can swing quickly depending on whether firms can pass higher fuel bills on to customers.