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Oil prices traded near flat in Asian trading on Friday after a sharp rally earlier in the week, with markets still on track for substantial weekly gains as escalating tensions in the Middle East stoked fears of global supply disruptions.
By 01:49 ET (06:49 GMT), Brent crude futures for May delivery slipped 0.2% to $85.25 per barrel, while U.S. West Texas Intermediate (WTI) crude futures edged 0.3% lower to $80.75 per barrel.
Despite the modest pullback, both benchmarks remained close to their highest levels in months. Brent surged nearly 5% in the previous session to its strongest level since July 2024, while WTI climbed more than 8%.
If gains hold, both contracts are on track to rise more than 18% this week, marking one of the sharpest weekly rallies in recent years.
Middle East tensions keep oil markets on edge
The rally in crude prices has been driven largely by escalating geopolitical tensions in the Middle East, where the conflict between the United States, Israel, and Iran entered its seventh consecutive day.
Although some traders moved to lock in profits after the week’s sharp advance, prices remained supported by ongoing missile strikes, retaliatory attacks, and concerns over potential disruptions to critical energy infrastructure across the region.
U.S. President Donald Trump also added to the uncertainty by stating that Washington would seek a role in determining Iran’s next leadership once the conflict ends.
Strait of Hormuz remains key market concern
A major focus for energy markets is the Strait of Hormuz, the narrow shipping lane between Iran and Oman that serves as one of the most vital oil transit routes in the world.
Roughly 20% of global oil supply passes through the strait each day, making it a critical chokepoint for international energy trade.
Any disruption to shipments through this waterway could significantly tighten global supplies and send oil prices even higher.
U.S. move aims to ease supply worries
In an effort to mitigate supply concerns, the United States announced that it would temporarily allow India to continue purchasing Russian oil for the next 30 days.
The move is intended to help stabilize global energy markets as geopolitical risks in the Middle East intensify.
Inflation risks rise with oil surge
Analysts warn that the recent surge in oil prices could place additional pressure on global inflation if supply disruptions persist.
Higher energy costs would not only affect consumers and businesses but could also complicate the policy outlook for major central banks, including the U.S. Federal Reserve, as policymakers balance inflation risks with economic growth concerns.
For now, energy markets remain highly sensitive to geopolitical developments, with oil prices likely to stay volatile as investors monitor the evolving conflict and its implications for global supply.
