OIL prices rose on Friday, posting substantial weekly gains as renewed military exchanges between the United States and Iran entered the seventh month of the conflict, while US diesel prices reached a record high amid tightening fuel supplies.
Brent crude futures settled 76 cents, or 0.8%, higher at US$92.68 a barrel, while West Texas Intermediate (WTI) crude gained 18 cents, or 0.2%, to settle at US$91.48.
For the week, Brent rose 7.6%, while WTI gained nearly 10%, as oil supply routes in the Middle East remained impaired by the conflict.
Reuters cited the surge in crude and fuel prices has added to inflationary pressures and government borrowing costs worldwide, fuelling concerns that economic growth could weaken without relief in energy markets.
"All sectors of the economy are affected by diesel. This is one of the reasons why the government bond yields in the United States are so high, it's the expectation that inflation will continue to go up," said Claudio Galimberti, chief economist at Rystad Energy.
Average US diesel prices reached a record US$5.85 a gallon, according to AAA data, as renewed US-Iran hostilities and Ukrainian attacks on Russian refineries compounded supply disruptions.
Diesel prices could rise further amid sharply lower inventories and increased demand from agricultural states entering harvesting and planting seasons, with diesel widely used to power farm equipment.
Heating oil futures, the equivalent futures contract for diesel, have also surged as the winter season approaches.
Citi raised its average Brent crude price forecast for the third quarter to US$86 a barrel from US$80, citing delays in the reopening of the Strait of Hormuz.
ANZ analysts raised their short-term Brent forecast to US$95 a barrel, warning of further upside risk if the Middle East conflict intensifies.
The US economy added 162,000 jobs in August, easing concerns over weakness in the labour market but strengthening expectations that the US Federal Reserve could raise interest rates later this month.
John Kilduff, partner at Again Capital, said the strong employment figures pointed to the possibility of higher interest rates, which was weighing on WTI prices.
Tanker Flows Remain Impaired
Despite the US government saying Middle Eastern oil flows had returned to near-normal levels in recent weeks, analysts and tanker trackers said flows remained seriously disrupted.
Four commodity vessels transited the Strait of Hormuz on Thursday, well below the 10-day average of about 15 vessels, according to preliminary shipping data.
"Oil seems to be in a phase where the conflict’s gridlock and recurring hostilities are regularly awakening a risk premium embedded in prices," said Norbert Rucker, head of economics and next-generation research at Julius Baer.
"So far, there is no indication that this week’s escalation materially impacted exports out of the Middle East and tightened the oil market," Rucker said. "Oil’s current rally seems mostly mood and fear driven."
US attacks this week that killed and wounded dozens of people, including Iranian civilians, were the fiercest clashes between the two countries since July.
The US campaign to pressure Iran’s economy by blockading its oil exports and curbing sanctions evasion is becoming increasingly difficult for Tehran to withstand, according to three senior Iranian sources.
Meanwhile, Iraq increased its August oil exports to about 2.34 million barrels per day from around 1.35 million bpd in July, according to two Iraqi energy officials. - September 5, 2026
