Crude prices posted weekly gains following a mid-week escalation in tensions between the US and Iran, which triggered retaliatory military strikes and left commercial shipping traffic through the strategic Strait of Hormuz severely constrained.
West Texas Intermediate settled at $71.51 per barrel, up from $68.78/bbl the previous week, while Brent closed at $75.28/bbl, up from $71.94/bbl a week earlier.
WTI gained almost 4% over the week, while Brent rose nearly 6%.
"Following the mutual attacks in the Gulf region and US President Trump's termination of the ceasefire, the price of Brent crude has risen by more than 10% within two days," Commerzbank analysts noted.
The trading week opened quietly as markets weighed a massive $11/bbl price cut from Saudi Arabia for Asian buyers alongside OPEC+'s weekend decision to increase August production quotas by 188,000 barrels per day.
Aramco set its August official selling price for Arab Light crude to Asia at a $1.50/bbl discount to the Oman/Dubai average, down from last month's $9.50 premium.
However, this initial downward pressure evaporated on Tuesday when the conflict intensified.
Iran attacked three commercial tankers in the Strait of Hormuz, including a Qatari LNG carrier and a Saudi tanker, prompting the US Treasury to immediately revoke a critical sanctions waiver that had authorized Iranian crude sales since June.
The situation intensified mid-week, sending crude futures higher. US Central Command launched successive waves of retaliatory airstrikes, hitting about 170 targets aimed at degrading Iran's maritime capabilities.
Additionally, the US revoked its general license authorizing certain Iranian oil transactions and allowed a wind-down period through July 17, the Department of the Treasury's Office of Foreign Assets Control said in a statement on Tuesday.
Iran responded by striking US military bases in Bahrain, Kuwait, Qatar, and Jordan, while President Trump officially declared the interim ceasefire "over" on Wednesday at the Nato summit.
By Thursday, markets found reassurance after Trump downplayed the risk of full-scale conflict and ruled out direct strikes on Iranian energy infrastructure.
On Friday, Trump posted on Truth Social that the US had agreed to resume talks with Iran at Tehran's request while reiterating that the ceasefire has ended.
"The Islamic Republic of Iran has asked us to continue 'talks.' We have agreed to do so, but the United States has stated to them, in no uncertain terms, that the cease fire is over!" Trump posted.
Additionally, US officials are reportedly demanding that Iran issue a public statement declaring the Strait of Hormuz open to shipping and affirming that vessels may safely transit the waterway.
Officials reportedly said internal struggles in Iran are hindering efforts to strike a deal, multiple media outlets reported on Friday.
A failure by Iran to declare the Strait open to shipping will result in consequences, officials reportedly said.
Despite the late-week pullback in prices, severe structural risks remain.
The prevailing threat level to maritime security in the Strait of Hormuz remains "severe," the Joint Maritime Information Center said on Friday, following recent developments in the Middle East.
While crude availability received a temporary reprieve, refined product markets for diesel and gasoline continue to flash tight supply conditions due to refinery strains and Russian fuel disruptions.
Ukrainian President Volodymyr Zelenskyy posted on X on Friday that Russia's gasoline crisis is deepening.
In a separate post on Friday, Zelenskyy said, "Ukrainian drones reached Siberia and struck the oil refinery in Omsk - nearly 2,500 kilometers from Ukraine. Now, no Russian oil refinery is beyond the reach of Ukrainian weapons."
Zelenskyy listed other targeted sites in Russia, including oil facilities in Saratov, Rostov, Tver, Stavropol, Krasnodar, Tatarstan and Bashkortostan regions.
"Drones were also used against facilities in the Moscow, Leningrad, and Bryansk regions," Zelenskyy posted.
On the domestic front, the Energy Information Administration reported that US commercial crude inventories rose by 3 million barrels to 411.4 million barrels, although stocks remain tight at 6% below the five-year average.
Despite the renewed geopolitical risks, global energy agencies continue to forecast a gradual rebalance in oil markets.
The Energy Information Administration's July Short-Term Energy Outlook, published Tuesday shortly before renewed tensions between the US and Iran, projected that global crude oil production and trade flows would return to near pre-conflict levels by the end of 2026, earlier than forecast in its June outlook.
The EIA expects most Middle East crude production and trade flows to recover by year-end, with 1.4 million b/d still shut in during Q4 2026 before most remaining disrupted output returns in Q1 2027.
The agency's forecast was based on the June 18 US-Iran memorandum of understanding.
The agency estimated that Middle East crude production shut-ins averaged 8.3 million b/d in June, down from 11.2 million b/d in May, reflecting improving supply conditions.
The EIA said global oil markets adjusted faster than it expected as weaker demand, particularly in Asia, supply rerouting by Persian Gulf producers, higher exports from North and South America, and strategic stock releases eased supply disruptions.
The EIA pegged Brent crude spot prices averaging $85/bbl in June, down $22/bbl from May, and $32/bbl from its April peak. Spot prices dropped below $70/bbl on July 1 as tanker traffic through the Strait of Hormuz accelerated and oil flows recovered, the STEO said.
"We expect ongoing oil inventory accumulation over the next year will continue to put downward pressure on crude oil prices, with Brent falling to an average of $65/bbl in 2027," according to EIA analysts.
The EIA forecasts Brent spot prices will average $74/bbl in Q3, down $27/bbl from last month's outlook. Brent spot prices are estimated to average $70/bbl in Q4 2026, down from $103/bbl in Q2.
The full-year Brent spot forecast is now estimated to average $82/bbl, down from $95/bbl in last month's outlook. For 2027, the Brent spot forecast was revised downwards by $15 to $65/bbl.
WTI spot prices are expected to average $76.26/bbl in 2026 and $60.76/bbl in 2027, according to the STEO.
Global oil inventories fell by an average of 5.1 million b/d in Q2 2026 and are expected to decline by another 2.2 million b/d in Q3 as previously stranded tankers continue unloading cargoes, the EIA said.
The EIA expects the market to return to its pre-conflict oversupply during the second half of Q3, forecasting inventory builds averaging 2.7 million b/d in Q4 of 2026 and 5 million b/d in 2027.
The International Energy Agency's July Oil Market Report, released Friday, offered a more cautious assessment, warning that renewed tensions between the US and Iran could derail efforts to rebuild depleted global oil inventories later in 2026.
The agency said seasonal trends and a rebound in fuel supplies are lifting consumption from May lows, with global oil demand forecast to fall by 1 million b/d this year before rising by 2 million bbl/d in 2027.
Global oil demand is projected to rise by over 8 million bbl/d by October from the May low of 97.9 million bbl/d, moving above 2025 levels for the first time since February.
Meanwhile, the US oil rig count remained unchanged from the previous week at 445, in the week ending July 10, according to data from Baker Hughes (BKR) released Friday. That compares with 424 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, dropped by 10 to 760 from 770 the previous week.
Money managers in the WTI crude futures and options markets maintained their net long positions in the week ended July 7, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released on Friday.
The data showed that money managers reported 186,489 long positions, down 12,869 from June 30, while short positions were up 6,166 to 111,810.