Oil benchmarks moved higher on Friday as market participants reacted to heightened tensions between the United States and Iran and to data suggesting tighter crude availability.
Market moves - Brent crude futures rose 21 cents, or 0.3%, to $71.87, while U.S. West Texas Intermediate crude increased 23 cents, or 0.4%, to $66.66.
Prices had already settled at their strongest level in six months on Thursday after U.S. President Trump warned that "really bad things" could happen if Iran did not reach an agreement concerning a nuclear program that Iran describes as peaceful but which the U.S. views as militaristic. The administration gave Tehran a time window of 10 to 15 days to come to terms.
Geopolitical developments - Iran has announced plans for a joint naval exercise with Russia, according to a local news agency, following a recent temporary closure of the Strait of Hormuz for military drills. The Strait of Hormuz is a crucial chokepoint opposite the Arabian Peninsula through which roughly 20% of global oil supply transits. Market observers say conflict or disruptions in that corridor could restrict supplies flowing into global markets and thereby exert upward pressure on prices.
Supply-side indicators - Further support for crude prices came from reported declines in inventories and constraints on exports among major producers. An Energy Information Administration report released on Thursday showed U.S. crude inventories fell by 9 million barrels, a drop accompanied by higher refining utilisation and increased exports.
Data from the Joint Organisations Data Initiative showed Saudi Arabia's oil exports in December were 6.988 million barrels per day, the lowest level since September, signaling a reduction in outbound flows from the world's largest oil exporter during that month.
Demand-side and policy context - Japan's annual core consumer inflation rate was 2.0% in January, marking the slowest pace in two years. The softer inflation reading could weigh on any plans by the Bank of Japan to lift its policy interest rate. The article notes that low interest rates in oil-importing countries such as Japan are typically seen as supportive for crude prices, because they can underpin demand dynamics in those economies.
The balance of geopolitical risk around the Strait of Hormuz, movements in crude inventories and export flows from major producers, and the monetary policy backdrop in key importing nations collectively influenced Friday's modest gains in oil benchmarks.