Morning Highlights: Oil slips, but heads for third weekly gain as Israel-Iran conflict keeps traders on alert

Crude prices edged lower Friday morning, paring some of Thursday’s gains, but remained on track for a third consecutive weekly rise as investors continued to monitor the deepening conflict between Israel and Iran and its implications for oil supply security.

Market snapshot (as of 6:45 a.m. EST):

• Brent (Aug): $77.03 (−$1.82)

• WTI (July): $75.96 (+$0.82; contract expires today)

• WTI (Aug): $73.90 (+$0.40)

Despite today's pullback, Brent is still poised to end the week nearly 4% higher and up around 20% month-to-date—its largest monthly gain since the pandemic-era volatility of 2020.

War premium remains in place

Oil markets have priced in a roughly $10 per barrel geopolitical risk premium, according to estimates from multiple analysts, amid the continued missile exchanges between Israel and Iran. While no critical oil infrastructure has been damaged so far, the threat of escalation remains ever-present. Thursday’s rally followed Israeli strikes on Iranian nuclear targets and Iranian missiles hitting an Israeli hospital.

The White House said President Trump would delay his decision on U.S. involvement in the conflict for “up to two weeks.” The pause injected a measure of relief into markets, though many analysts caution that a miscalculation could spark a broader disruption.

"While Israel and Iran carry on pounding away at each other, there can always be an unintended action that escalates the conflict and touches upon oil infrastructure," said PVM analyst John Evans.

Strait of Hormuz and Iranian exports in focus

Iran, OPEC’s third-largest producer, is keeping oil flowing by loading tankers one at a time and shifting floating storage closer to Chinese shores, according to vessel tracking data shared with Reuters. Tehran exports more than 2 million barrels per day and produces around 3.3 million bpd.

Any attack on export infrastructure—or attempts to block the Strait of Hormuz—could force prices toward $100. About 20 million bpd of oil and fuel pass through the narrow waterway, making it a key risk barometer.

Volatility, but no panic—yet

Although freight and insurance rates have surged and Brent’s prompt premium over later contracts remains elevated, broader market signals suggest that buyers—particularly China—have not yet begun panic buying. Analysts warn, however, that this could change quickly.

“If China starts to buy more aggressively, freight rates will jump—and the rest of the world’s energy prices will follow,” said Nadia Martin Wiggen of Svelland Capital.

Macro backdrop: Oil’s inflationary shadow

Brent’s steady rise has added to inflation concerns globally, particularly for oil-importing nations such as India, Japan, and much of Eastern Europe. According to RBC and Lombard Odier, sustained prices above $100 could add 1% to inflation and subtract 1% from global growth

In the U.S., economists estimate that sustained $75 crude could push CPI up by 0.5% through year-end. Meanwhile, the Federal Reserve on Wednesday held rates steady but penciled in two potential cuts for later this year. Should growth soften, those cuts could come sooner.

Stocks mostly steady, energy names outperform

Equity markets have remained mostly resilient, with energy and defense stocks outperforming. Israeli equities have surged 6% over the past week, while airline stocks—major oil consumers—have been under pressure.