Oil prices are heading for a second consecutive weekly gain as the unresolved U.S.-Iran conflict continues to disrupt Middle East energy flows, while Washington’s threat of sweeping new sanctions adds another layer of uncertainty to an already fragile global oil market.
Brent crude futures slipped 34 cents, or about 0.4%, to $93.44 a barrel by 0646 GMT on Friday, while U.S. West Texas Intermediate (WTI) fell 44 cents, or 0.5%, to $86.76. Despite the day’s modest decline, Brent had gained more than 7% over the previous five trading sessions, while WTI had climbed more than 8%. Both contracts had reached their highest levels since July 24.
The immediate trigger for renewed market anxiety is Washington’s escalating economic pressure on Tehran.
U.S. Treasury Secretary Scott Bessent said Thursday that the United States plans to impose what he called the “toughest sanctions in history” on Iran, with more details expected Monday. The announcement followed President Donald Trump’s warning of sweeping economic consequences for countries, businesses and financial institutions that continue providing Iran with economic support.
For oil traders, the concern is straightforward: more pressure on Iran could mean even less oil reaching the global market.
Strait of Hormuz becomes the critical pressure point
The Strait of Hormuz remains at the center of the supply threat.
Before the conflict, roughly one-fifth of global oil consumption moved through the strategically important waterway. But shipping activity has fallen sharply as the conflict and competing blockades disrupt tanker movements. Reuters reported that only seven commodity ships passed through the strait on Thursday — roughly half the previous day’s tally, according to ship-tracking data from Kpler.
The disruption extends beyond Iranian barrels.
Analysts at BMI, part of Fitch Solutions, said exports are already under significant pressure because of simultaneous disruptions involving the Strait of Hormuz and the Red Sea. The firm said the risks to its Brent price outlook are now tilted to the upside and that it will review its forecast later this month.
That means the market is not simply pricing in the loss of Iranian crude. Traders are also watching the potential impact on exports from major Gulf producers including Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.
Iranian oil supplies to China are already tightening
Another warning sign is emerging in Asia.
Reuters reported Friday that offers of Iranian crude to Chinese buyers have fallen sharply, while prices for available cargoes have risen as the U.S. blockade squeezes Iranian exports. Fewer Iranian cargoes are being offered for September and October delivery, while crude held on vessels outside the blockade zone has declined to about 80 million barrels from roughly 105 million barrels before the blockade was reinstated.
The squeeze is particularly significant for China’s independent refiners, which are major buyers of sanctioned Iranian crude.
Kpler data cited by Reuters showed China’s Iranian oil imports falling to about 534,000 barrels per day in August, compared with an average of roughly 1.4 million barrels per day in 2025.
Some Chinese refiners are already looking elsewhere for replacement barrels, including crude from Brazil and Iraq.
Why oil could remain under pressure
The oil market is now caught between two opposing forces.
On one side, concerns about disrupted supply are pushing prices higher. On the other, traders remain wary that elevated prices could eventually weaken fuel demand and economic growth.
For now, however, geopolitics is dominating the market.
Oil gained more than 2% on Thursday after Trump’s latest threats, with Brent closing around $93.78 and WTI at $87.83, according to Reuters. The latest rally came as investors assessed the prospect of prolonged disruption around the Strait of Hormuz and the possibility of tougher U.S. action against Tehran.
The bigger question is what happens next.
The United States says its economic pressure is intended to force Iran toward an end to the conflict and restore safer shipping through Hormuz. China, meanwhile, has rejected unilateral sanctions and called for a political and diplomatic solution.
That puts the world’s oil market in a precarious position.
If shipping through Hormuz deteriorates further, available crude supplies could tighten significantly and send prices higher. If diplomatic efforts succeed and tanker traffic normalizes, some of the geopolitical premium currently embedded in oil prices could unwind quickly.
For now, neither outcome is assured.
And that uncertainty is precisely what is keeping oil traders on edge.
What to watch next
Markets will be watching several developments closely:
- The U.S. sanctions package: Washington is expected to provide more details on Monday.
- Strait of Hormuz traffic: A further decline in tanker movements could intensify supply fears.
- Iranian exports to China: Falling shipments could force Chinese refiners to compete more aggressively for alternative crude.
- Gulf oil production and exports: Any disruption affecting Saudi Arabia, Iraq, Kuwait or the UAE could have a much larger impact on global prices.
- Diplomatic developments: Any credible progress toward ending the conflict could rapidly change the market’s risk premium.
For consumers, the stakes are equally clear: if the supply disruption deepens, higher crude prices could eventually translate into higher fuel and transportation costs well beyond the Middle East.
The oil rally may have started with geopolitics — but its next move could be felt at petrol stations, shipping companies, airlines and economies around the world.
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