OIL prices edged lower on Friday but still ended the week around four per cent higher as the continuing conflict between the United States and Iran sustained concerns over global energy supplies despite renewed diplomatic engagement between the two countries.
Crude oil settled at around US$71 per barrel after markets responded positively to reports that Washington and Tehran would continue technical and peace negotiations even as military exchanges persisted and uncertainty remained over the status of an earlier ceasefire.
Nevertheless, disruptions to shipping through the Strait of Hormuz, which handles about one-fifth of global oil and liquefied natural gas trade, continued to underpin prices by maintaining a geopolitical risk premium.
Although investors broadly expect the conflict to remain contained, reduced tanker traffic and the possibility of supply disruptions have continued to support the oil market.
The International Energy Agency also warned that prolonged geopolitical tensions could delay efforts to rebuild global crude inventories and disrupt the anticipated balance in world oil markets.
Meanwhile, the US dollar index was little changed at around 100.9 on Friday and was on course to end the week broadly flat as investors assessed the fragile security situation in the Middle East.
Oil prices retreated after surging earlier in the week following reports that the United States and Iran would continue peace negotiations. However, renewed exchanges of military strikes between the two countries revived concerns that the conflict could escalate further, while uncertainty over the previous truce persisted.
The renewed hostilities also heightened fears of another wave of inflationary pressure, reinforcing market expectations that the US Federal Reserve could tighten monetary policy further.
Markets are currently pricing in a 62 per cent probability of a Federal Reserve interest rate increase in September, up from 58 per cent a week earlier but below the approximately 70 per cent expectation recorded earlier this week.
Separately, New York Federal Reserve President John Williams said one of his principal concerns regarding inflation was the strength of demand driven by rapid advances in artificial intelligence, highlighting another factor influencing the outlook for US monetary policy. - July 11, 2026
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