US-Iran Conflict Boosts Oil Prices Amid Record Diesel High

Oil prices rose on Friday to end the week higher due to renewed US-Iran military exchanges. Brent crude futures settled at $96.28 a barrel, up 76 cents or 0.8%, while West Texas Intermediate crude futures finished at $91.48 a barrel, up 18 cents or 0.20%. The rally in oil prices has pushed inflation and government borrowing costs higher worldwide.

The average US diesel price hit a record high of $5.85 per gallon, according to AAA data, while heating oil surged as winter approaches. Analysts at Citi raised their average Brent crude price forecast for the third quarter to $86 a barrel from $80, citing delays in reopening the Strait of Hormuz.

However, some analysts, such as Norbert Rucker, head of economics and next generation research at Julius Baer, believe that oil prices are 'mostly mood and fear driven' due to recurring hostilities in the Middle East. Despite this, tanker flows remain disrupted, with only four vessels transiting the Strait of Hormuz on Thursday, well below the 10-day average.