Oil Prices Surge on Escalating US-Iran Tensions

Oil prices are on track for their biggest weekly gain since August as tensions between the US and Iran escalate. The Brent crude futures price rose 6.5% this week, its largest increase since August 17, while U.S. West Texas Intermediate crude futures climbed 8.8%, its strongest performance since July 13.

The increased hostilities have raised concerns over Middle East supply risks, with analysts turning more bullish on prices. Israeli Defence Minister Israel Katz warned that Israel would 'cripple' Iran's military and civilian infrastructure, including energy facilities, while a US campaign to throttle Iran's economy is growing increasingly difficult to withstand.

The Strait of Hormuz, a key chokepoint for global oil supplies, has seen four commodity vessels transiting the waterway on Thursday, down from nine a day earlier and well below its 10-day average tally of about 15. Iraq increased its August oil exports to around 2.34 million barrels per day from about 1.35 million bpd in July.

Citi raised its average Brent crude price forecast for the third quarter to $86 a barrel from $80, citing the reopening of the strait as taking longer than expected. Meanwhile, ANZ analysts also raised their Brent crude forecast on Friday to $95 a barrel in the short term, with upside risk if the Middle East conflict intensifies.