Sept. 4 — Oil prices notched their steepest weekly gain since mid-July on Friday, as intensifying fighting between the United States and Iran rattled energy markets and traders scrambled to price in the risk of a wider Middle East war.
Brent crude settled at $95.67 a barrel, up 0.2% on the day but 7.1% higher on the week, while U.S. WTI crude climbed to $91.56, adding 0.3% Friday for a 9.8% weekly surge, the sharpest rally for both benchmarks in nearly two months.
The spike followed the fiercest clash between Washington and Tehran since July, with U.S. military strikes this week killing and wounding dozens, including Iranian civilians, in a conflict that has now dragged on for seven months since strikes by the U.S. and Israel first hit Iran at the end of February. Iran has since retaliated by striking American bases, targeting vessels in the Strait of Hormuz, and firing salvos at Jordan, Kuwait and Bahrain, dramatically raising the stakes around the world’s most critical oil chokepoint.
The rhetoric has only sharpened the market’s nerves. Israeli Defence Minister Israel Katz renewed threats to “cripple” Iran’s military and civilian infrastructure, including its energy facilities, while U.S. Vice President JD Vance said Washington would not return to talks “unless Tehran stops attacking commercial shipping in the Strait of Hormuz.”
“Oil markets are repricing their vulnerability,” said Priyanka Sachdeva of Phillip Nova Pte Ltd, while Rebecca Babin of CIBC Private Wealth Group noted that “the quieter overnight session on the military front is taking some of the momentum out of the upside,” pointing to a slight cooling in prices as fighting paused overnight.
Some of the bullish pressure was offset by a surge in Iraqi crude exports, which jumped to roughly 2.34 million barrels a day in August from 1.35 million in July, driven by steep discounts and Iranian approval for Iraqi tankers to keep moving through the Strait despite the tensions. A comment from Russian President Vladimir Putin floating a possible path toward ending the Ukraine war also tempered momentum, even as refined products such as diesel posted steeper gains than crude itself.