Oil Claws Back Some Losses As Iran Tensions Abate Through U.S. Show Of Force

But Bloomberg warns that oil could hit $90 if hostilities lead to combat: File Image/Pixabay

Oil clawed back some of its previous session losses on Friday, as the U.S. entered its holiday weekend and analysts continued to offer comment on the possible outcomes of geopolitical tensions between Washington and Tehran as well as the international rerouting of Venezuelan oil.

Brent settled up 37 cents at $64.13 per barrel, and West Texas Intermediate settled up 25 cents at $59.44 per barrel.

Market sentiment was said to be somewhat stable thanks to reports that Israel and several Arab partners urged U.S. president Donald Trump to delay any military action against Iran in response to that country’s bloodthirsty crackdown against protesters; Trump had already seemed to be stepping away (if only temporarily) from armed conflict.

Phil Flynn, senior market analyst at Price Futures Group Inc., said of a U.S. aircraft carrier and other vessels heading toward the Persian Gulf after operating in the China Sea, “With that carrier strike group making the move to the Gulf, it doesn’t seem likely anything will happen soon.”

Still, Bloomberg warned that the Iran situation could trigger considerable market turmoil later this year.

BloombergNEF estimated that Brent crude would average $55 per barrel in 2026, assuming Iran does not disturb global oil markets; however, if the Islamic republic’s oil exports were completely removed from the market starting in February, “an extreme scenario we currently view as unlikely, Brent could rise to an average of $71/bbl in 2Q 2026.”

Bloomberg added that if the disruption persisted through the rest of 2026, Brent could average $91 in 4Q 2026.

Flynn also said of the  earlier fears that the U.S. takeover of Venezuela’s oil industry following the ouster of president Nicolas Maduro, “The supply from Venezuela has not become the tidal wave that was expected…buying today seems to be people not wanting to be caught short over the long weekend.”

For the record, international oil executives are reportedly lobbying for fast changes to Venezuela’s hydrocarbons law that would allow foreign partners to export the oil they produce directly, rather than handing it over to state oil company PDVSA to sell on their behalf.

Meanwhile, short-term tightness in the North Sea plus options markets and commodity index rebalancing were credited for helping to boost an oil market that has been in the doldrums due to worries over global oversupply.

Elsewhere on Friday, analysts were keenly anticipating a weekend meeting in Florida between the U.S. and Ukraine, with the expectation that an end to its war with Russia would be a major headwind for oil prices.