Oil Prices Rise Amid US-Iran Tensions, But Further Gains Limited

Oil prices are on track to end the week higher due to renewed military tensions between the US and Iran, as well as persistent security risks in the Strait of Hormuz. The uncertainty over energy shipments through this key waterway has revived concerns over disruptions to global supplies.

Brent crude futures for November delivery traded at $94.77 per barrel on Friday, up 7.6% from last week's close of $88.10. West Texas Intermediate (WTI) crude futures for October delivery traded at $90.34 per barrel, an 8.3% increase from $87.06 a week earlier.

The latest escalation in hostilities between Washington and Tehran has increased the uncertainty over energy shipments through the Strait of Hormuz, which accounts for around 20 million barrels per day of crude oil and petroleum products. This added a geopolitical risk premium to crude prices, pushing Brent above $95 per barrel during the week.

However, reports of a sharp recovery in oil flows through the strait and signals from Washington that it does not seek a prolonged conflict with Iran have limited further price gains. US President Donald Trump said the US was 'controlling' the Strait of Hormuz and helping commercial vessels move through the waterway.

US Energy Secretary Chris Wright noted that more than 17 million barrels of oil passed through the strait on Monday, marking the highest daily flow since the conflict with Iran began disrupting energy shipments. CNN reported that US forces escorted 40 commercial vessels carrying about 18 million barrels of oil through the strait on Tuesday.

Expectations that the latest round of fighting may not develop into a prolonged military campaign have also capped upward pressure on prices. Trump said the renewed US campaign against Iran would not continue for 'too long', and US Vice President JD Vance stressed that Washington was using different forms of pressure to protect commercial shipping and maintain oil and gas flows through the Strait of Hormuz.