Oil prices exhibited minimal fluctuation on Friday, yet they are poised for a second consecutive weekly increase, as the ongoing stalemate in the U.S.-Iran conflict persists in hindering oil supplies from the critical Middle Eastern production area. An earlier peace deal between the sides expired this week, with neither party demonstrating any initiative to rekindle negotiations. U.S. President Donald Trump issued a warning of economic repercussions for nations that extend their support to Iran. Brent crude futures increased by 4 cents, reaching $93.82 a barrel, following a rise of over 2% in the prior session. U.S. West Texas Intermediate crude futures declined by 6 cents, settling at $86.78 a barrel, after experiencing a 2.3% increase in the previous session. Over the past five days, Brent has experienced an increase exceeding 7%, while WTI has seen a rise surpassing 8%. Both benchmarks attained their peak levels since July 24.

Oil prices have risen amid increasing concerns that the ongoing U.S.-Israeli conflict with Iran may hinder supplies from key producers like Saudi Arabia, Iraq, the UAE, and Kuwait. On Wednesday evening, Trump issued a warning of “economic warfare and isolation on an unprecedented scale” against Tehran and cautioned of repercussions for any nation offering “any type of lifeline to Iran”. The United Arab Emirates this week suspended all financial and economic transactions with Iran until further notice, highlighting the strained relations between the significant Gulf Arab oil producer and Tehran. Since the onset of the Iran war on February 28, following military strikes by the U.S. and Israel, thousands of fatalities have been reported.

Since then, Tehran’s blockade of the Strait of Hormuz and Iranian attacks on energy facilities across the Middle East have caused significant disruptions to global oil and gas flows. Shipping traffic through the Strait of Hormuz on Wednesday remained stable compared to the previous day, with nine vessels transiting the waterway, significantly lower than pre-war levels. Prior to the conflict in Iran, approximately one-fifth of global consumption was transported through the strait. The duration of the disruption will be a critical determinant for crude prices. JPMorgan estimates that each additional month of disruption could add approximately $7 to $8 per barrel to Brent prices. If the disruption persists for three months, the bank anticipates average monthly Brent prices to approximate $114 per barrel.

Goldman Sachs has issued a cautionary note indicating that Brent may escalate to $120 a barrel should shipping disruptions in the Strait of Hormuz, the preeminent oil transit route globally, continue. Goldman Sachs anticipates that tensions in the Middle East will ultimately subside in accordance with its base case scenario. The bank forecasts Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year. It was noted that risks continued to be skewed toward the upside, with disruptions in the Strait of Hormuz and the Red Sea possibly enduring for a longer duration than initially anticipated.