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US Oil Update: Oil Holds Steady as Traders Weigh Iran Measures, China Response

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Crude futures were little changed in midday trading Friday as market participants weighed tougher US measures against Iran and the risk of a broader response from China.

Front-month West Texas Intermediate crude futures edged up by 0.15% to $86.98 per barrel, while Brent futures rose by 0.58% to $94.32/bbl.

Analysts said continued instability across the Middle East is keeping crude and refined-product prices supported as markets monitor the potential for further interruptions to regional energy flows.

"The lack of a solution in the Middle East continues to raise oil prices, which have now risen for several days in a row," Pia Fromlet, an economist at SEB Research, said in a Friday note.

Washington is preparing a broad package to further isolate Iran, with measures potentially extending to foreign companies and institutions that continue commercial ties with the country, MUFG Research analyst Soojin Kim said in a Friday note.

The US plans to disclose details of the measures next week, and the scope of the action could have wider implications for international trade with Iran, Kim said.

Traders are concerned about a potential response from China, a major buyer of Iranian crude, if the measures target companies and institutions that maintain commercial ties with Iran, according to a note from Saxo Bank.

US Treasury Secretary Scott Bessent said Thursday that he will share details of the economic sanctions against Iran on Monday.

In response, Iran's Foreign Minister Seyed Abbas Araghchi posted on X, citing instances of sanctions against Iran over the past 14 years and saying those rounds had failed.

"We have seen this movie before," Araghchi posted on X, saying it was the same story with different "bullies."

Separately, Omani and Iranian foreign ministers are also reportedly discussing options to restart talks on the Strait of Hormuz.

Meanwhile, French President Emmanuel Macron and Saudi Arabian Crown Prince Mohammed bin Salman are reportedly set to meet in Paris on Monday, with talks to focus on alternative transportation and routing options in response to disruptions in the Strait of Hormuz.

The US naval blockade has virtually halted Iran's oil exports, while vessel attacks in the Strait of Hormuz and Ukrainian strikes on Russian energy infrastructure are adding pressure to global fuel markets, Kim added.

Despite ongoing disruptions, analysts maintain that the market may be able to absorb current disruptions for a while.

"Even without a formal agreement to reopen the Strait, the economy and markets can likely live with the current situation for some time," Seb analysts said.

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