By: Economy Middle East

Oil prices edged lower on Friday but remained on course for a second consecutive weekly gain, as the deadlocked U.S.-Iran conflict continued to disrupt crude supplies from the key Middle East production hub.

As of 5:01 GMT, Brent crude futures declined 28 cents, or 0.30 percent, to $93.5 a barrel, following a 2.4 percent jump in the previous session. U.S. West Texas Intermediate (WTI) crude fell 41 cents, or 0.47 percent, to $86.42 a barrel, after gaining 2.3 percent in the prior session.

Oil prices rally as U.S.-Iran conflict remains unresolved

Oil prices rallied over the past week, with Brent crude climbing more than 7 percent and WTI advancing over 8 percent. Both benchmarks reached their highest levels since July 24 this week.

The gains have been driven by concerns that the unresolved U.S.-Israeli conflict with Iran could prolong disruptions to supplies from major oil producers, including Saudi Arabia, Iraq, the UAE and Kuwait.

A previous peace agreement between the parties expired this week, with neither side taking steps to resume negotiations. U.S. President Donald Trump has also threatened economic measures against countries that continue to support Iran.

BMI said on Friday that it plans to reassess its Brent crude price forecast this month, noting that the risks to its outlook are tilted to the upside.

It added that oil exports are already facing significant pressure from disruptions in both the Strait of Hormuz, where Iran has shut the waterway and the U.S. has imposed a naval blockade, and the Red Sea, where Houthi restrictions have further constrained shipping.

Trump warns Tehran of economic warfare and sanctions

Thousands of people have been killed since the Iran war began on February 28, when the U.S. and Israel launched military strikes against Iran.

Oil prices also rallied as ship traffic through the Strait of Hormuz remained sharply reduced. Kpler data showed that only seven commodity vessels passed through the waterway on Thursday, half the previous day’s number. Before the conflict began, roughly one-fifth of global oil consumption transited the strait.

On Wednesday evening, U.S. President Donald Trump warned Tehran of economic warfare and isolation on an unprecedented scale, threatening consequences for countries providing any form of support to Iran.

U.S. Treasury Secretary Scott Bessent reinforced Trump’s warning on Thursday, saying Iran would face the “toughest sanctions in history.”

Iran largely brushed aside the threat of additional U.S. economic sanctions, while China, a major importer of Iranian crude, also dismissed the warnings. It remained unclear what form the new measures would take, as Washington has already imposed extensive restrictions on Iran’s oil exports and continues to enforce a naval blockade against the country introduced earlier this year.

Nevertheless, Trump’s latest remarks suggested there was little prospect of a near-term easing in tensions between Washington and Tehran, raising expectations that disruptions to oil supplies across the Middle East will persist.

Meanwhile, the UAE suspended all financial and economic transactions with Iran until further notice this week, underscoring the increasingly strained relationship between the Gulf oil producer and Tehran.