Oil prices shot up on Friday, with US crude jumping by more than 4 per cent, to post sharp weekly gains, as supply disruptions continued with no breakthrough in sight for ending the Iran war and reopening the Strait of Hormuz.
Global stock markets also felt the heat of higher oil prices, which was further compounded by inflation worries and uncertainty over what direction the US Federal Reserve - where Kevin Warsh is set to take over from Jerome Powell as chairman - will take
Markets were digesting the lacklustre outcome from the two-day meetings between US President Donald Trump and US President Xi Jinping.
Brent, the benchmark for two thirds of the world's oil, settled 3.35 per cent higher at $109.26 a barrel. West Texas Intermediate, the gauge that tracks US crude, jumped 4.2 per cent to close at $105.42 per barrel.
From last week's close, Brent was up nearly 8 per cent and WTI leapt 10.5 per cent.
“Oil prices moved toward a weekly gain as the Strait of Hormuz remained affectively closed, prolonging disruptions to global energy supplies and keeping markets on edge,” said MUFG research analyst Soojin Kim.
“Despite a ceasefire formally remaining in place since early April, tensions between the US and Iran continue with little progress toward a lasting agreement, while a US naval blockade of Iranian ports remains active and shipping conditions in the Gulf stay highly volatile.”
US President Donald Trump increased pressure on Iran to reach a diplomatic deal to end the war and reopen the strait, a key waterway through which more than 20 per cent of global crude and liquefied natural gas (LNG) supplies are shipped.
"I am not going to be much more patient," Mr Trump told Fox News in an interview. "They should make a deal."
He also suggested hunting down Iran's enriched uranium.
“The other thing we could do is bomb it again,” Mr Trump said. “But I, just, I would feel better getting it, and we will get it.”
Mr Trump, who met China's President Xi Jinping in Beijing this week, said the Chinese leader offered to help with Iran, although this was not confirmed by the Chinese side.
China is a major buyer of Iranian oil and has strong relations with Tehran.
Oil prices have been trading at elevated levels since the start of the war on February 28, with the strait effectively blocked by Tehran. Most ships are avoiding passing through the waterway as a safety measure, with hundreds of ships stuck in the Arabian Gulf.
"Energy prices will likely remain elevated given the little progress made in Middle East talks in the short run," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
The International Energy Agency also warned this week that global oil markets could remain “severely undersupplied” until October even if the war ends next month, as flows through the Strait of Hormuz have fallen sharply and only limited tanker traffic has resumed.
The prolonged supply shock is also adding to inflation concerns globally as energy inventories continue to tighten, Ms Kim added.
US commercial crude oil inventories decreased by 4.3 million barrels for the week ending May 8, compared to the previous week, according to a report from the Energy Information Administration.
Markets feel the heat
On Wall Street, the momentum of the rally fuelled by artificial intelligence-related stocks waned, as the benchmark S&P 500 stumbled 1.24 per cent at the close, although it still managed to eke out a seventh consecutive weekly gain. The Dow Jones Industrial Average slid 1.24 per cent and the tech-heavy Nasdaq Composite fell 1.54 per cent.
In Europe, London's FTSE 100 retreated 1.7 per cent, with investor sentiment further dragged by political upheaval, particularly challenges facing UK Prime Minister Keir Starmer.
Frankfurt's DAX closed more than 2 per cent lower, while Paris' CAC 40 dropped 1.6 per cent.
Earlier in Asia, Chinese stocks fell as the Trump-Xi meeting failed to drum up investors sentiment. The Shanghai Composite gave up gains to close 1 per cent lower, while Hong Kong's Hang Seng Index fell 1.6 per cent, also hit by inflation worries. Tokyo's Nikkei slid nearly 2 per cent.
Gold, on the other hand, slipped nearly 3 per cent as inflation concerns and a stronger dollar dented investor sentiment.
The precious metal, widely considered a safe-haven asset, declined 2.93 per cent to $4,540.49 an ounce. It has declined 2.26 per cent in the past month, but still up about 5 per cent in 2026.
