Oil prices ticked up in Asian trading on Friday, building on substantial gains from the prior two sessions and positioning benchmarks for about a 6% advance for the week.
As of 22:41 ET (03:41 GMT), April Brent futures climbed 0.2% to $71.81 per barrel, while West Texas Intermediate crude for the same month rose 0.5% to $66.78 per barrel. Both contracts sat close to levels not seen since early August and were headed for weekly gains in excess of 6%.
Market participants pointed to growing concern about a potential escalation between the United States and Iran as the principal factor underpinning the rally. U.S. President Donald Trump warned Tehran that "bad things" would happen if no nuclear agreement is reached within about 10-15 days, a comment that boosted fears of a possible military response. Media reports have said the president is weighing a limited strike on Iranian targets as an option to compel compliance with a deal.
Any worsening of tensions involving Iran - a significant producer within OPEC - raises the possibility of disrupted flows through the Strait of Hormuz. That waterway is a key transit point for roughly a fifth of global oil shipments, and renewed sensitivity to supply risk has elevated the geopolitical premium in crude prices.
Traders also noted that this week's rally partly reflected a reversal of losses posted earlier in the week. Prices had fallen when optimism briefly rose that talks between the U.S. and Iran were making progress; however, recent tougher rhetoric from both sides restored the risk premium and pushed crude back toward multi-week highs.
Supply-side data added to the upside. U.S. Energy Information Administration figures released on Thursday showed a steep drawdown in crude inventories, with stocks falling by about 9 million barrels in the latest week. That outcome contrasted with expectations that inventories would build by some 1.7 million barrels.
The EIA data also recorded declines in gasoline and distillate stocks, both coming in below forecasts. Analysts and market participants interpreted those declines as evidence of robust demand from refineries and consumers.
Beyond physical balances, attention was focused on U.S. economic data due later on Friday. The Personal Consumption Expenditures Price Index - the Federal Reserve's preferred inflation gauge - was set for release, and its readings could influence expectations for the central bank's policy path. Recent Federal Reserve minutes had shown a hawkish tone and suggested reluctance to cut rates soon; the PCE report could therefore provide additional clarity on the rate outlook and feed into oil market positioning.
Against this backdrop of tighter-than-expected inventories and heightened geopolitical risk, oil markets entered the weekend with gains intact and participants weighing incoming economic data for clues on demand and policy direction.