Global oil benchmarks tracked their second straight week of gains on Friday, with both Brent and WTI up over 15% as new supply concerns persist amid mounting US-Iran tensions.
West Texas Intermediate settled higher at $82.47 per barrel, up from $71.51/bbl the previous week, while Brent closed at $88.30/bbl, up from $75.28/bbl a week earlier.
The Brent futures contract registered a weekly increase of 16.2%, while the WTI futures contract rose 15.5% over the week.
The rally has been primarily fueled by the escalating conflict in the Middle East, which has severely disrupted maritime trade and energy flows.
US Central Command launched a fresh wave of strikes for the seventh consecutive day, beginning at 3 p.m. ET on Friday, targeted at further "degrading Iranian military capabilities."
The attacks come a day after the US military destroyed a surveillance tower belonging to Iran's Islamic Revolutionary Guard Corps on the country's southeastern coast.
Confirmed flows through the Strait have fallen to just 5.1 million barrels per day, down from 12.5 mmb/d a week ago, with Iranian exports representing 1.7 mmb/d of that total, according to a J.P. Morgan note.
Commercial shipping activity in the Strait of Hormuz slumped to a three-week low on Thursday, as heightened military tensions between the US and Iran forced operators to prioritize security over trade routes, Kpler's shipping data showed on Friday.
"Confirmed crossings through the monitored Strait of Hormuz zone declined further on 16 July, falling to eight transits from 15 seen the previous day and reaching a three-week low," according to MarineTraffic, a ship tracking firm owned by Kpler.
Compounding supply fears, Iran has renewed threats targeting traffic through the Strait of Bab al-Mandab, another vital route for Saudi exports, prompting fears of a broader supply crunch.
"New concerns were recently fueled by Iran's renewed threat to close the Strait of Bab al-Mandab, through which a significant portion of Saudi oil exports is currently being rerouted due to the blockade of the Strait of Hormuz," Commerzbank analysts said.
The strategists noted that any disruption in the Bab al-Mandab Strait would likely push oil prices higher.
Supply concerns were amplified by renewed Ukrainian attacks on Russian energy infrastructure.
On Friday, Ukraine struck the Yanos refinery and several Russian military-linked fuel and naval assets during operations on July 16-17, according to a statement by the General Staff of the Armed Forces of Ukraine.
The strikes damaged the Yanos refinery in Russia's Yaroslavl region, igniting a fire while officials assessed the extent of the damage, the General Staff said.
The plant processes about 15 million metric tons of crude annually and produces gasoline, diesel, jet fuel, and other refined products, the General Staff said.
Ukraine also struck two tankers, including a liquefied gas carrier, and a tugboat in the Black Sea and Azov Sea, the General Staff said.
The military said Russia uses the vessels to transport oil, petroleum products and liquefied gas while bypassing international sanctions and supplying fuel for military operations.
Separately, fresh Ukrainian drone strikes on refineries in Russia's Bashkortostan and Krasnodar regions have severely hampered Russia's refining capacity, forcing Russian energy firms to reportedly seek gasoline imports from India.
The Security Service of Ukraine's drone strikes on tankers Louise 1 and Banda this week highlighted an escalation in attacks targeting the maritime infrastructure supporting Moscow's oil exports.
RBC analysts said Ukrainian strikes on Russian energy infrastructure have pushed damaged refinery capacity to an estimated 4 mmb/d.
RBC said June data showed Russian refinery intake had fallen to 3.43 mmb/d, the lowest level on record, while crude exports rose to 5.47 mmb/d, the highest since October 2019.
Meanwhile, in Europe, uncertainty over the European Union's failure to finalize its 21st sanctions package against Russia added to concerns over the effectiveness of the bloc's existing oil price cap mechanism.
Beyond geopolitical risks, tightening physical fundamentals drove bullishness in the market.
On Wednesday, data from the US Energy Information Administration showed a 1.7 mmbbl decrease in commercial crude inventories, bringing levels to 409.7 mmbbls.
While OPEC projects a more modest demand growth of 800,000 b/d for 2026, the supply side remains under heavy pressure.
The US oil rig count rose by seven to 452 in the week ended July 17, from 445 the previous week, according to Baker Hughes (BKR). That compares with 422 oil rigs operating in the US a year earlier.
The consolidated North American oil and gas rig count, a key early indicator of future production levels, increased by 26 to 786 from 760 the previous week.
Money managers in the WTI crude futures and options markets maintained a bullish stance in the week ended July 14, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released on Friday.
The data showed money managers held 182,883 long positions, down 3,606 from July 7, while short positions fell by 15,310 to 96,500.
Looking forward, as geopolitical risks converge across the Middle East and Eastern Europe, energy markets remain highly sensitive to any further disruptions to global supply chains, analysts said.