Oil prices clawed back from a huge loss and were up by more than 1 per cent on Friday on lingering supply concerns after tension between the US and Iran cooled following Washington's decision to hold off a military strike.
Brent, the benchmark for two thirds of the world's oil, climbed 0.85 per cent to $64.30 a barrel as of 7.08pm UAE time on Friday. West Texas Intermediate, the gauge that tracks US crude, rose 0.69 per cent to $59.60 per barrel. They were up by as much as 1.5 per cent during the session.
From last Friday's close, they are on pace to add about 2 per cent. After dropping by about 20 per cent in 2025, Brent and WTI are off to a strong start in 2026, so far gaining about 6 per cent and 5 per cent, respectively.
Crude prices were on a six-day winning run until it was snapped on Thursday as fears over instability in Iran eased after US President Donald Trump signalled he would hold off attacking Iran.
Earlier this week, Brent and WTI hit their highest levels in months amid civil unrest and protests in Iran as Mr Trump floated the idea of military action against the country.
Iran is the world’s seventh largest producer of crude. Nationwide protests have rocked the country for weeks, and activists say thousands have been killed amid a government crackdown. Rights groups have put the death toll at more than 2,500 people. On Wednesday, authorities held a mass funeral for security forces personnel killed during the unrest.
“Escalating US-Iran tensions have renewed concerns over potential disruptions to physical heavy crude flows, which will be especially important to monitor for fuel oil markets in the upcoming weeks,” said Donna Dong, a research analyst at London-based Onyx Capital Group.
However, oversupply dynamics in the global crude market are expected to cushion any major shock to oil prices if Mr Trump chooses to take military action against Iran, Manpreet Gill, chief investment officer for Africa, Middle East and Europe at Standard Chartered, had told The National.
Tension between the US and Venezuela, as well as wobbly peace negotiations between Russia and Ukraine, have also impacted the movement of oil prices and sentiment on supply.
“The events in Venezuela lend over to those in Iran,” said Norbert Rucker, head of economics and next-generation research at Swiss bank Julius Baer. “Geopolitics dominates the oil market for the time being. The risks in focus are an escalation of unrest, an outside intervention and thus oil supply disruptions.”
While geopolitics brings lots of noise, neither the events in Venezuela nor Iran should “ultimately alter the big picture”, he said. Julius Baer sees oil prices trading in the high $50s for much of 2026, with some potential deviation in the coming weeks.
“Iran is a more important oil market player than Venezuela,” Mr Rucker said. “However, the oil market is in surplus, Middle East has spare production capacity, and the US government is super-focused on containing inflation for US consumers. This context should limit disruption risks and make any oil price spike short-lived.”
Markets are also keeping an eye on the US Federal Reserve's monetary policy direction this year. Mr Trump has pushed for lower interest rates, arguing it would help to boost the world's largest economy.
