Oil futures dipped modestly in early trading on Friday while staying on track for notable weekly advances as fresh exchanges of strikes between the United States and Iran kept supply-risk considerations prominent.
By 0125 GMT, Brent futures were trading at $76.24 a barrel, down 6 cents, or 0.08%. U.S. West Texas Intermediate (WTI) was at $72.04, a fall of 4 cents, or 0.06%. Despite the small intraday moves, Brent was positioned for a roughly 6% gain on the week and WTI for about a 5% rise.
The market remained sensitive to developments on the ground in the Gulf. Iranian armed forces launched attacks on U.S. military infrastructure in Gulf states on Thursday after U.S. strikes targeted locations in Iran’s southern coastal and eastern provinces, further testing a three-week-old ceasefire. In parallel, Iranian media reported multiple explosions across southern Iran, including in Bushehr, the site of one of the country’s nuclear power plants.
The uptick in violence coincided with national mourning. The renewed hostilities occurred on the day Iran conducted the burial for its slain Supreme Leader Ayatollah Ali Khamenei, following a week of mass funeral processions and rallies. The article states that Khamenei was killed on the first day of the war on February 28.
Those security developments have had direct implications for maritime traffic. The conflict has delayed the full reopening of the Strait of Hormuz, a strategic waterway that, before the war, conveyed roughly 20% of daily global oil and gas supplies. The continued restriction of transit through the strait preserves a tangible upside risk for oil and gas flows.
Still, market participants found some reassurance in policy choices. Daniel Hynes, senior commodity strategist at ANZ bank, noted that although the U.S. increased attacks on military sites in Iran, the market was comforted by the Trump administration’s decision to avoid hitting Iranian energy infrastructure. Hynes added that this sentiment was reinforced by public comments from President Trump, who said he did not expect a return to full-scale conflict and suggested that any further incidents would be resolved quickly.
"Despite the U.S. ramping up attacks on military sites in Iran, the market drew some reassurance from the Trump administration’s decision to avoid targeting Iranian energy infrastructure," Daniel Hynes said. "This was aided by comments from President Trump, who said he doesn’t expect a return to a full-scale conflict."
Macroeconomic signals also weighed on prices. Concerns that accelerating inflation could soften oil demand exerted downward pressure on the market. In the United States, initial claims for unemployment benefits fell last week, a sign that the labor market remains in what some characterize as a "slow-hire, slow-fire" mode. In China, producer price inflation accelerated to a four-year high in June, which the article says is squeezing manufacturers’ profit margins as weak domestic demand limits pricing power.
The interplay between supply-side disruptions tied to the Gulf hostilities and demand-side worries driven by inflation metrics left oil trading with modest intraday losses but significant weekly gains. Market participants continued to weigh the risk that the Strait of Hormuz restrictions and episodic strikes could constrain flows against growing indicators that inflation and labor-market dynamics may restrain fuel consumption.
Market snapshot:
- Brent: $76.24 a barrel, down 0.08% at 0125 GMT
- WTI: $72.04 a barrel, down 0.06% at 0125 GMT
- Weekly trajectory: Brent set for ~6% gain; WTI set for ~5% gain