Oil prices closed higher on Friday as markets reacted to renewed tensions between the United States and Iran, though gains were tempered by cautious optimism that negotiations could prevent a wider escalation in the Middle East.
Brent crude futures settled at $101.29 per barrel, rising 1.23%, while U.S. West Texas Intermediate (WTI) crude ended at $95.42 per barrel, up 0.64%. Earlier in the trading session, Brent had surged as much as 3% after reports of fresh air strikes exchanged between the United States and Iran intensified concerns over energy supply disruptions in the Gulf.
Despite the day’s gains, both benchmark contracts still recorded weekly losses of more than 6%, reflecting the volatile swings that have defined energy markets since the outbreak of the Iran conflict seven weeks ago.
At the centre of investor concern remains the Strait of Hormuz, one of the world’s most critical shipping routes through which roughly a fifth of global oil trade passes. Although some tanker movements resumed this week after the temporary reopening of the waterway, uncertainty over the durability of the ceasefire continues to weigh heavily on global markets.
Analysts said traders were caught between fears of renewed conflict and hopes of a diplomatic breakthrough.
“We’re on the cusp of a breakthrough in negotiations or we’re on the cusp of a renewal of the fighting,” said John Kilduff, partner at Again Capital, describing a market driven largely by geopolitical headlines rather than supply fundamentals.
The latest market volatility followed reports of clashes involving U.S. and Iranian forces in the Gulf, alongside renewed attacks targeting the United Arab Emirates. The conflict, which began on February 28 following joint U.S.-Israeli strikes on Iran, has already triggered sharp spikes in oil prices and intensified concerns about global inflation and energy security.
U.S. President Donald Trump sought to reassure markets on Thursday, insisting that a ceasefire remained in effect while simultaneously renewing pressure on Tehran to abandon its nuclear ambitions. Traders interpreted the mixed messaging as another sign that negotiations remain fragile.
Market participants are also closely monitoring the pace at which Gulf oil producers could restore full supply capacity should tensions ease. Questions over inventory levels, sanctions policy, and future shipping access through the Strait of Hormuz remain unresolved.
Meanwhile, Reuters reported that the U.S. Commodity Futures Trading Commission is investigating approximately $7 billion worth of oil trades placed shortly before major Iran war-related announcements by President Trump, adding another layer of scrutiny to already turbulent energy markets.
The continued instability has broader implications beyond oil markets. Rising fuel prices are already placing pressure on import-dependent economies across Africa, Asia and Latin America, with countries such as Kenya seeking emergency financial assistance from international lenders to cushion the economic fallout of the conflict.
