Oil prices edged slightly lower on Friday, consolidating recent gains and holding near six-month highs as persistent tensions between the United States and Iran continued to underpin the market. Brent crude futures settled at $70.69 a barrel, down just 2 cents, or 0.03%, while U.S. West Texas Intermediate finished at $65.21 a barrel, down 21 cents, or 0.32%.
Prices had climbed to their highest levels since early August on Thursday after reports that U.S. President Donald Trump was weighing potential actions against Iran, including targeted strikes, reigniting fears of supply disruptions. While both Washington and Tehran have since signaled a willingness to engage in dialogue, Iran said on Friday that its defense capabilities would not be part of any talks, leaving uncertainty firmly in place.
Analysts said the market remains almost entirely driven by geopolitical risk tied to Iran. Traders have already priced in a sizable risk premium, but uncertainty over whether military action will occur — and how Iran might respond — has made further upside difficult to quantify. Some of the week’s gains also stalled as hopes for a tentative Russia-Ukraine ceasefire emerged, alongside speculation that an attack on Iran may ultimately be avoided as diplomatic channels reopen.
The U.S. added fresh sanctions on Friday, targeting seven Iranian nationals and at least one entity, reinforcing Washington’s hardened stance even as it leaves the door open to negotiations. Meanwhile, a firmer U.S. dollar added mild pressure on crude prices after Trump said he plans to nominate former Federal Reserve Governor Kevin Warsh to replace Jerome Powell when his term ends in May. A stronger dollar typically weighs on oil by making it more expensive for buyers using other currencies.
Supply-side developments also tempered sentiment. U.S. crude output has been recovering following weather-related shutdowns earlier in the week, while Kazakhstan is edging closer to resuming production at the Tengiz oilfield. With prices posting strong weekly gains, analysts said some profit-taking ahead of the weekend was to be expected.
Looking further ahead, Russia is expected to enter peak refinery maintenance periods later this month and again in September, which could affect product markets but is unlikely to significantly tighten crude supply. A Reuters poll of analysts showed most expect oil prices to hover near $60 a barrel this year, as the risk of global oversupply offsets the threat of disruptions stemming from ongoing geopolitical tensions.