Brent crude edged higher in late-day short-covering on Friday as investors weighed the risk of potential U.S. military action against Iran, while WTI finished marginally lower in a volatile session dominated by geopolitical uncertainty. Brent settled up 10 cents, or 0.14%, at $71.76 a barrel, while U.S. West Texas Intermediate slipped 4 cents, or 0.06%, to $66.39. For the week, both benchmarks gained more than 5%, extending a rally driven largely by rising Middle East tensions.
For much of the session, prices traded lower as the market waited for clarity on the standoff between Washington and Tehran. President Donald Trump reiterated this week that “bad things” would happen if Iran failed to reach a deal to curb its nuclear ambitions, while signaling he was considering limited military strikes. Iran’s foreign minister said a draft counterproposal could be ready within days following recent talks, keeping diplomacy technically alive even as military assets build in the region.
The oil market remains caught between competing narratives — the risk of sudden escalation versus the possibility that negotiations continue. Iran sits across the Strait of Hormuz from major Gulf producers, and roughly 20% of global oil supply transits the waterway. Any disruption there would have immediate consequences for global crude flows, underpinning the current geopolitical risk premium.
Options markets reflected heightened nervousness, with increased buying of Brent call options in recent days as traders positioned for potential upside spikes. Still, analysts noted that while headline risk is driving short-term price swings, underlying supply conditions remain comfortable.
Supporting prices this week was a sharp 9-million-barrel draw in U.S. crude inventories, alongside higher refinery utilization and exports. However, broader supply expectations continue to temper bullish enthusiasm. OPEC+ has signaled it may resume gradual production increases from April, and analysts at major banks have warned that global oil balances still point to surplus conditions later this year unless deeper production cuts are implemented.
A U.S. Supreme Court ruling against the administration’s use of emergency powers to impose tariffs had little impact on crude markets, as traders remain focused almost exclusively on Middle East developments.
For now, oil appears locked in a geopolitical holding pattern, with traders bracing for a potential binary outcome while balancing firm near-term momentum against expectations of ample supply later in the year.