Key Takeaways

• Oil advances: Brent rose 0.8% to $95.75 per barrel, while WTI gained 0.5% to $90.47.
• Weekly gains locked in: Both contracts set for 3-6% weekly advances on sustained Middle East tensions.
• Hezbollah rejects ceasefire: The Iran-backed group rejected the proposed Lebanon-Israel truce, refused to withdraw troops, and denounced the Lebanon-Israel negotiations.
• Israel keeps striking: Air strikes in southern Lebanon continued, with Israeli officials signaling no withdrawal or halt to operations.
• Iran peace deal torpedoed: Tehran has repeatedly made a Lebanon ceasefire a precondition for any lasting peace agreement.
• Iran halted indirect talks: Reports from earlier this week showed Tehran stopped communicating with Washington after accusing the U.S. of violating their ceasefire.
• U.S.-Iran strikes continue: Washington hit multiple Iranian targets this week; Iran’s IRGC retaliated against American bases in Kuwait and Beirut.
• Officials still claim progress: U.S. officials maintained a deal was close — but diplomatic evidence has been scarce since at least late March.
• Hormuz still choked: While U.S. intervention helped spur some additional ship crossings, oil flows remain well below pre-war levels.
• 20% of global oil still disrupted: No clear de-escalation keeps supply pressures firmly in place.

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Oil prices rose during Asian trading on Friday after Iran-backed group Hezbollah rejected a ceasefire between Lebanon and Israel, undermining U.S. efforts to broker peace in the Middle East.

Crude was headed for weekly gains after a flare-up in military tensions in the region, with the United States and Iran trading airstrikes, while bitter fighting between Israel and Hezbollah forces in Lebanon continued.

Brent oil futures for August rose nearly 0.8% to $95.75 a barrel by 23:05 ET (03:05 GMT), while West Texas Intermediate crude futures rose 0.5% to $90.47 a barrel.

Hezbollah Rejects Israel Ceasefire, Undermining Iran Peace Hopes

The Iran-backed, Lebanon-based Hezbollah militia rejected a proposed ceasefire with Israel on Thursday and said it would not withdraw its troops from the country, while also denouncing Lebanon-Israel negotiations.

Israel kept up its air strikes in southern Lebanon, drawing retaliatory attacks from Hezbollah. Israeli officials signaled that forces would not be withdrawing from southern Lebanon or halting operations in the country, after a brief pause earlier this week.

The development further undermined hopes for a U.S.-Iran peace deal, given that Tehran has repeatedly signaled that a Lebanon ceasefire is paramount for any lasting peace agreement.

Reports earlier this week showed Iran had halted indirect negotiations with the United States, after Tehran accused Washington of violating their ceasefire with recent attacks.

The U.S. struck several targets in Iran this week, drawing retaliatory attacks by the Revolutionary Guard against American targets in Kuwait and Beirut.

The strikes came even as U.S. officials asserted that a peace deal with Iran was close and that talks were ongoing. But there has been little evidence of diplomatic progress with Iran, despite claims to the contrary from Washington since at least late March.

Oil Heads for Weekly Gains as Middle East Peace Hopes Dither

Brent and WTI futures were set to add between 3% and 6% this week, as oil flows through the Strait of Hormuz remained muted.

While U.S. intervention did help spur an increase in ship crossings of the channel, oil flows still remained well below pre-war levels.

The trend pointed to little immediate improvement in global oil supplies, especially given that roughly a fifth of the world’s oil consumption passed through Hormuz prior to the war.

A lack of any clear de-escalation in the war pointed to continued disruptions in oil supplies, keeping prices largely underpinned.