Oil markets wrapped up their third consecutive week of gains on Friday as investors watched closely for U.S. President Donald Trump’s next move regarding the Israel-Iran conflict. West Texas Intermediate (WTI) crude settled just below $75 per barrel, while Brent crude, the global benchmark, hovered around $76, both on track to post roughly 3% gains for the week.
The latest rally in oil prices was largely driven by geopolitical tensions ignited by renewed hostilities between Israel and Iran. While the conflict hasn’t disrupted oil flows yet, the mere prospect of a wider regional escalation has kept traders on edge.
Early Friday trading saw a slight dip in prices as Trump signaled a potential preference for diplomacy over immediate military intervention. “We’ll give diplomacy a chance,” he told reporters on Thursday, suggesting that a final decision on U.S. involvement is still pending. This hint of restraint helped cool the market’s reaction temporarily but did little to derail the broader upward trend in crude prices.
Despite rising oil prices, analysts from major financial institutions remain cautious about the long-term impact of the conflict on global energy markets. Citi’s commodities research team believes the risk of significant supply disruption remains limited.
“Disrupting oil supply isn’t in the interest of either Iran or the U.S.,” said Spiro Dounis, Citi’s senior energy analyst. He noted that even if Iran’s 1.1 million barrels per day of oil exports were completely halted, Brent prices would likely rise only modestly to the $75–78 range — not far above current levels.
Goldman Sachs offered a more dramatic short-term outlook, estimating that in the event of an actual disruption, oil prices could temporarily surge to $90 per barrel. However, the bank expects prices to normalize over the next year, potentially falling back to the $60 range in 2026 as supply recovers.
Importantly, current oil flows remain uninterrupted. Shipments through the Strait of Hormuz — one of the world’s most crucial maritime oil chokepoints — continue unimpeded, and Iranian exports have not declined, easing some of the market’s worst fears.
A key factor cushioning the market is spare production capacity among OPEC+ members. The alliance, which includes major oil producers like Saudi Arabia and Russia, has been gradually increasing output in recent months, providing a potential buffer against sudden supply shocks.
“Above-average global spare capacity — equivalent to 4–5% of global demand — is the main cushion against Iran-specific disruptions,” said Goldman’s Daan Struyven. He pointed to the bloc’s strategic unwinding of production cuts as a stabilizing force in the current market environment.
With uncertainty still looming over the geopolitical situation in the Middle East, oil prices are likely to remain volatile in the near term. Much will depend on whether Trump follows through with military action or continues to push for a diplomatic resolution. For now, investors will be watching closely, knowing that even the perception of risk can be enough to sway global oil markets.
