Oil prices diverge as U.S. inventories rise and Iran tensions persist

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Oil prices diverge

Highlights

Brent rises 0.34%, while WTI falls 0.27%.
Oil heads for a second weekly decline.
Hormuz shipping threats persist.

According to Reuters, traders remain cautious as the United States emphasizes economic pressure on Tehran rather than expanding military operations. January Brent futures rose 0.34%, to $96.15 a barrel, while December WTI futures fell 0.27%, to $88.50, according to the latest market data. Both contracts were on track to decline approximately 2% for the week, following much steeper losses of 16% for Brent and 13% for WTI in the previous week.

Trump blockade strategy reshapes oil market expectations

President Donald Trump's indication that a formal agreement with Iran was unnecessary to end the conflict has strengthened expectations that Washington will continue relying on sanctions and restrictions on oil shipments. The approach has reduced fears of an immediate expansion of direct military operations, although the nine-month conflict remains unresolved. Earlier optimism about possible diplomatic progress faded after renewed attacks on regional energy facilities and commercial shipping.

The uncertainty has left oil trading within a relatively narrow range after weeks of pronounced volatility. Investors see limited prospects for either a rapid settlement or a major escalation, creating competing pressures on prices. Meanwhile, evidence of weakening U.S. consumption has added to bearish sentiment. The Energy Information Administration reported Thursday that crude oil and fuel inventories increased during the previous week, reflecting softer refined-product demand and higher imports.

Strait of Hormuz threats keep supply risks elevated

Security concerns remain concentrated around the Strait of Hormuz, a critical export route for major Middle Eastern oil producers. Iran's military claimed Thursday that explosions struck four tankers after they ignored warnings, although the accounts could not be independently verified. Yemen's Iran-aligned Houthis separately claimed attacks on Saudi Arabia's East-West pipeline pumping station, an oil facility in Yanbu and an Aramco building in Riyadh.

These developments highlight the vulnerability of regional supply routes even as expectations of further U.S. military escalation diminish. Saudi Arabia's East-West pipeline provides an alternative route for crude exports toward the Red Sea, making its security particularly important when Gulf shipping faces disruption.

Weak demand and shipping risks shape the outlook

The market now faces two opposing forces: rising U.S. inventories suggest softer consumption, while continued attacks threaten the reliability of Middle Eastern exports. A sustained disruption to shipping through Hormuz or damage to Saudi oil infrastructure could tighten available supplies, but without such an interruption, weaker demand and Washington's preference for economic pressure may continue limiting any recovery in crude prices.

The next direction for oil will depend largely on whether geopolitical tensions translate into actual supply losses. Until then, inventory trends and signs of changing fuel demand are likely to remain important drivers of market sentiment.

As we previously reported, gold prices rebound from 13-month low as major investors return.

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