Oil prices held on to their second straight weekly gain, stabilising after a sharp and volatile rally driven by escalating geopolitical tensions in the Middle East. Brent crude for July hovered above $111 a barrel, while US benchmark West Texas Intermediate traded near $106, capping a roughly 12% weekly jump.
The move follows a dramatic spike in the previous session, when Brent briefly surged to $126, underscoring the intensity of supply concerns tied to the ongoing Iran standoff. The latest leg of the rally comes after US President Donald Trump signalled he would persist with a naval blockade of Iranian ports, raising fresh doubts about the reopening of the Strait of Hormuz — a critical artery for global oil flows.
Tehran, however, appears in no mood to concede. Iran's supreme leader, Mojtaba Khamenei, indicated that a deal with Washington remains unlikely, reiterating that the country would not abandon its nuclear or missile ambitions and suggesting continued control over the strait. The waterway, which previously handled about a fifth of global crude shipments, has been largely shut amid the conflict, amplifying fears of a prolonged supply shock.
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Supply Shock Fears Intensify
Crude has surged more than 25% over the past two weeks as the stalemate drags on, with traders increasingly pricing in tighter availability. The futures curve has flattened, reflecting immediate supply concerns rather than longer-term scarcity.
Energy major ConocoPhillips has warned that the situation could soon tip into a full-blown supply crunch. The company flagged potential “critical shortages” for import-dependent nations as early as June, as previously shipped cargoes from the Persian Gulf have now largely been delivered.
With fewer replacement barrels available, the physical market is beginning to tighten — a shift that is narrowing the gap between paper and real-world prices. Trading volumes remained subdued in Asia due to Labour Day holidays across key markets including China, Singapore, Germany and France, contributing to muted price action despite heightened volatility.
At the same time, global crude flows are being reshaped. US exports have surged to record levels, as buyers scramble to replace disrupted Middle Eastern supply, highlighting a rapid reordering of trade routes in response to the الأزمة.
Japan's top currency official Atsushi Mimura said authorities remain ready to step into crude futures markets if required, even as he refrained from commenting on intervention in the yen. A weaker dollar has also lent some support to oil prices, adding another layer to an already complex macro backdrop.
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