The escalating conflict between the US and Iran continues to drive oil markets, with international crude prices falling about 3% in early Friday trading, but the overall weekly gain remains on track to surpass 10%.
Crude oil prices slipped approximately 3% in early Friday trading, but the overall weekly gain remains locked in at 10% due to the intensifying US-Iran conflict.
At 6:25 AM Eastern Time, the international benchmark Brent crude futures for July delivery fell 3% to $97.72 per barrel, with a projected weekly gain of 10.9%.
US West Texas Intermediate (WTI) crude futures declined 2.8% to $89.59 per barrel, posting a weekly increase of 8.6%.
Conflict Details
Overnight, the US Central Command completed its 13th consecutive night of airstrikes against Iran, targeting military command centers, drone storage facilities, communication networks, coastal monitoring stations, and naval forces.
The US Central Command stated that these airstrikes are aimed at further weakening Iran's threat to civilian commercial vessels and shipping transiting the Strait of Hormuz.
The military agency issued a statement: "Despite recent attacks by the Islamic Revolutionary Guard Corps of Iran, this international shipping waterway remains open for navigation. Under the escort of the US military, commercial vessels can transit the strait freely and normally."
"Currently, a total of over 50,000 US military personnel are deployed throughout the Middle East."
President Trump, in an interview with Axios on Thursday, stated that the Middle East conflict has expanded to a new front in the Red Sea, and he is considering a massive strike against Iran. Trump said the planned airstrikes would be larger than all military operations in this conflict combined, and that the intensity of the strikes Iran has faced is far from sufficient.
"I am planning an unprecedented large-scale offensive, on a scale never seen before, and I am about to finalize the decision. All US operational preparations are complete," Trump said in the interview.
Following the Iran-backed Houthi group in Yemen's claim of attacking two Saudi oil tankers in the Red Sea, Trump stated that if the Houthis launch any further attacks, the US will hold Iran responsible.
Trump posted on Truth Social: "If such attacks recur, the US will hold Iran fully responsible. The Houthis are Iran's proxy forces; the US will impose intense military punishment on Iran and the Houthis."
Iranian state media reported that the Islamic Revolutionary Guard Corps attacked a US military base in Jordan on Thursday.
US Secretary of State Marco Rubio, speaking to reporters on Thursday, described Trump's strategy against Iran as "a head for an eye," a policy of doubling retaliation.
Capital.com senior market analyst Daniela Hathorn wrote in a Friday morning research note that with heightened instability in key global shipping lanes, the crude oil market is once again pricing in a high geopolitical risk premium.
"Attacks on Red Sea shipping are dragging down global trade and energy security expectations, dampening market risk appetite," she analyzed. "Combined with geopolitical tensions in the Strait of Hormuz, the market generally judges that geopolitical risks are unlikely to dissipate in the short term, energy supply will remain tight, and inflation risks are on the rise."
UBS Global Wealth Management strategist Giovanni Staunovo proposed in a report on Thursday that the market may have overestimated the speed of crude oil production recovery in the Middle East.
"We still believe the pace of production recovery in the Middle East is slower than market expectations, as capacity restoration requires more tanker capacity to transport supplies into the region; with the renewed conflict, logistics transport remains sluggish. The tight supply-demand balance will support oil prices."
UBS forecasts that Brent crude oil prices will fall back to $85 per barrel by the end of this year.
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