Oil prices climbed further on Friday, with both major global benchmarks poised to close the week above $100 a barrel for the first time since mid-May, as intensifying attacks on shipping routes in the Middle East heightened fears that disruptions to global crude supplies could persist.
Brent crude futures gained 81 cents, or 0.8%, to $108.44 a barrel by 0345 GMT, while U.S. West Texas Intermediate crude rose 69 cents, or 0.7%, to $103.17 a barrel. The two benchmarks had already surged by more than 6% on Thursday, underscoring the speed with which geopolitical tensions have translated into higher energy prices.
On a weekly basis, both contracts were trading nearly 13% higher, putting them on course for their sharpest weekly advance since the week ended July 17.
The latest rally has been driven largely by growing concern over the security of critical oil and shipping routes across the Middle East. The conflict has increasingly affected areas beyond the immediate battlefield, raising the prospect that crude supplies could remain constrained for an extended period.
The Iran-aligned Houthis seized control of Yemen's port of Mocha on Thursday, creating another potential threat to commercial traffic through the Red Sea. At the same time, tanker movements through the Strait of Hormuz remain restricted as attacks in and around the strategic waterway have intensified.
The Strait of Hormuz is particularly important to global energy markets because large volumes of oil and petroleum products normally pass through the narrow passage linking the Persian Gulf with the Gulf of Oman. Any prolonged disruption threatens to tighten supplies and place additional upward pressure on prices.
"While meaningful volumes are still moving through the Strait of Hormuz, flows remain well below pre-war levels, underscoring how fragile the situation has become," ING analysts said in a note.
Diesel prices cross historic threshold
The impact of the supply disruptions is also being felt in the United States, where the national average price of diesel surpassed $6 a gallon on Thursday for the first time, according to fuel price tracker GasBuddy.
The increase reflects the combined effects of disruptions linked to the U.S.-Iran war and Ukrainian attacks on Russian refineries. Refinery outages can reduce the availability of refined petroleum products, putting additional pressure on fuel markets even when crude supplies themselves remain available.
Markets are also closely watching the position of U.S. President Donald Trump, who has shown no indication that Washington intends to ease its attacks on Iran.
Trump warned that the United States could strike Iran's Pickaxe Mountain near the heavily damaged Natanz uranium enrichment facility. At the same time, he said he believed the war would end immediately after the November midterm elections.
Tanker attacks intensify
Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday after the United States struck five Iranian oil tankers. Iran's Islamic Revolutionary Guard Corps subsequently warned that its response would escalate if further attacks were carried out.
The widening scope of attacks has added to concerns that the conflict could become increasingly difficult to contain, with consequences extending beyond oil-producing countries to shipping, refining and global fuel markets.
"With events spiralling and Iran showing it is willing to stretch this conflict as wide and as long as it can, it is becoming increasingly likely that WTI crude will retest the $119.48 high from early March," IG analyst Tony Sycamore said.
For oil traders, the possibility of a prolonged disruption is now becoming as important as the immediate headlines. A sustained reduction in physical shipments would tighten the balance between supply and demand and could push prices significantly higher.
China could determine the next move
China, the world's largest crude importer, is emerging as a key factor in determining whether the current rally continues.
Analysts say continued Chinese buying could magnify the effect of supply disruptions by absorbing available barrels and leaving less crude for other consumers. Strong demand from China could therefore reinforce the upward pressure created by the geopolitical crisis.
At the same time, the Organisation of the Petroleum Exporting Countries has been lowering its expectations for demand growth. OPEC cut its forecast for global oil demand growth in 2026 to 380,000 barrels per day, according to a copy of its monthly report, marking the fifth consecutive downward revision.
OPEC's own production also declined in August. A Reuters survey found that the group's oil output fell by 640,000 barrels per day during the month.
That combination of weaker expected demand and sharply rising geopolitical risk leaves the market facing conflicting forces. While softer demand projections could normally limit price gains, physical supply disruptions could overwhelm that pressure if they persist.
"The next leg in oil will depend less on headlines and more on whether physical flows improve or deteriorate further," said Phillip Nova analyst Priyanka Sachdeva.
"The question now is whether the market can stabilise below $120, or whether another wave of supply disruption pushes crude into a completely new price regime."
For now, traders remain focused on the movement of tankers, the security of the Strait of Hormuz and the possibility of further attacks on energy infrastructure. With Brent and WTI already above $100 a barrel, any further deterioration in physical oil flows could expose the market to another sharp price surge.