Oil prices set for 4% weekly gain as U.S.-Iran tensions persist

Oil prices are poised to close the week with a gain of around 4% as negotiations between the U.S. and Iran remain deadlocked, prolonging supply risks in the Middle East.

Brent crude futures traded near $85 a barrel on Friday, extending gains from the previous session. The contract is on track to mark its third consecutive weekly advance, supported by persistent geopolitical tensions and concerns over potential disruptions to oil flows from the region.

The impasse in U.S.-Iran talks over reviving the 2015 nuclear deal has heightened uncertainty in energy markets, with analysts warning that prolonged delays could exacerbate supply tightness. Iran, a major oil producer, has indicated it may reduce exports if sanctions relief is not secured, further tightening global supplies.

U.S. crude stockpiles data, released Thursday by the Energy Information Administration, showed a larger-than-expected drawdown in inventories, adding upward pressure on prices. Analysts noted that while inventories remain above pre-pandemic levels, the decline underscores steady demand and constrained supply buffers.

Market participants are also monitoring developments in the Red Sea and Strait of Hormuz, key chokepoints for global oil shipments. Any escalation in regional tensions could disrupt shipping lanes, exacerbating supply concerns.

The weekly gain reflects broader market sentiment, with Brent crude up roughly 4% since last Friday’s close. The contract’s performance contrasts with broader equity markets, where risk sentiment remains fragile amid economic uncertainty.

Analysts at Goldman Sachs and JPMorgan have reiterated bullish outlooks for oil, citing geopolitical premiums and potential supply constraints. However, they caution that prices could face volatility if diplomatic progress is achieved or if demand concerns resurface.

For the week, Brent crude is set to post its largest weekly gain since early April, underscoring the sensitivity of energy markets to geopolitical developments and inventory dynamics.