Oil benchmarks climbed in Asian trading on Friday as market participants reacted to comments by President Donald Trump that he was in no hurry to conclude hostilities with Iran. The move reflected heightened concern that the confrontation could persist and keep crude supplies from the Middle East under strain.
Market moves
By 20:37 ET (00:37 GMT) Brent futures had risen 1.1% to $106.27 a barrel, while West Texas Intermediate futures increased 1% to $96.83 a barrel. Both contracts were on track for substantial weekly advances, each up between 15% and 18% over the course of the week.
Drivers of the rally
Prices jumped sharply on Thursday after reports emerged of air strikes in and around Iran and accounts that Tehran's lead negotiator for Pakistan-brokered talks with Washington had resigned. Those developments compounded fears that diplomatic channels were weakening and that the conflict could extend, sustaining upward pressure on crude.
When speaking to reporters on Thursday evening, the president said he did not want to "rush" into a deal with Iran and also said the United States would not use nuclear weapons. He reiterated assertions that the U.S. had "crippled Iran's military capabilities" and described the country as "in disarray." Those comments increased market concern that a protracted U.S.-Iran conflict could leave oil flows from the region uncertain.
Ceasefire and diplomatic efforts
The president said Israel and Lebanon agreed to a three-week extension in their ceasefire after talks in Washington, though the announcement provided little relief to crude markets. Earlier in the week Washington extended a ceasefire with Tehran indefinitely, even as signs of de-escalation remained limited.
Strait of Hormuz - the supply chokepoint
A central focus for traders is the Strait of Hormuz, where disruptions have continued. The waterway had supplied roughly 20% of the world's oil before its closure in late-February. This week Iran was reported to have attacked and captured ships attempting to transit the channel, and U.S. officials said they had seized Iranian vessels trying to breach the naval blockade. Iran also released footage of commandos storming a ship and highlighted its fast-boat capabilities in operations in Hormuz.
Diplomatic talks have largely stalled, with the two sides at an impasse: Iran has demanded that the U.S. lift its naval blockade before any negotiations can resume, while Washington has insisted that Iran fully reopen the Strait of Hormuz. That standoff has left the channel and associated supply routes in continued uncertainty.
Bottom line
With geopolitical tensions remaining elevated and concrete signs of de-escalation absent, crude prices moved higher on the prospect that oil flows through the Middle East could remain disrupted. Market participants are pricing in that extended uncertainty, with both Brent and U.S. crude posting double-digit gains for the week as of Friday evening.