Oil prices hovered near six-month highs on Friday, rising for the first time in three weeks as Washington said Iran would be in trouble if it didn’t reach a deal on its nuclear program within days, raising concerns about a potential conflict.
At 1025 GMT, Brent crude oil futures were down 39 cents, or 0.5%, at $71.27, and US West Texas Intermediate crude oil was down 37 cents, or 0.6%, at $66.06.
Brent is up 5.1% so far this week, while WTI is up 5%.
“If we take President Trump’s words at face value, we’re looking at a potential binary outcome,” said Ole Hansen, head of commodity strategy at Saxo Bank. “The market is nervous and it will be a wait-and-see period.”
US President Donald Trump said on Thursday that “really bad things” will happen if Iran does not reach a deal to reduce its nuclear program. President Trump has set a deadline of 10 to 15 days.
Meanwhile, local news agencies reported that Iran is planning joint naval exercises with Russia, days after temporarily closing the Strait of Hormuz for military exercises.
The major oil producers are located on the opposite side of the oil-rich Arabian Peninsula, across the Strait of Hormuz, through which about 20% of the world’s oil supplies pass. Conflict in the region could limit oil supplies to global markets and push up prices.
Priyanka Sachdeva, senior market analyst at Philip Nova, said: “Following multiple failed nuclear talks between the US and Iran, market focus has clearly shifted to rising tensions in the Middle East, even as investors debate whether actual disruption will materialize.”
Traders and investors have increased their purchases of call options on Brent crude oil in recent days, betting that prices will rise, according to analysis by Saxo Bank.
Also supporting oil prices were reports of declining crude oil inventories and export restrictions in the world’s largest oil producing and exporting countries.
U.S. crude oil inventories fell by 9 million barrels due to increased refining usage and exports, according to a Thursday report from the Energy Information Administration.
Concerns over what will happen to interest rates in the US, the world’s largest oil consumer, have limited the rise in oil prices.
“Recent Fed minutes suggest interest rate stability or even the risk of further rate hikes if inflation remains high, which could dampen demand,” said Philip Nova’s Sachdeva.
Low interest rates are generally thought to support oil prices.
The market was also considering the impact that ample supply would have on prices, and talks from OPEC+ were leaning toward restarting increased crude oil production from April.
JPMorgan analysts Natasha Kaneva and Lyuba Savinova said in a client note that the oil surplus evident in the second half of 2025 continued into January and is “likely to continue.”
“Our balance remains expected to be significantly surplus in the second half of this year,” the person said, adding that a production cut of 2 million barrels per day would be necessary to prevent excess stocks from building up in 2027.
(Reporting by Anna Hirtenstein in London; Additional reporting by Laila Kearney in New York and Trixie Yap in Singapore; Editing by Christopher Cushing, Sonali Paul and Elaine Hardcastle)
