Oil prices steady as Middle East tensions persist

Oil prices showed little movement in early trading on Friday after suffering significant losses in the previous session

Oil prices showed little movement in early trading on Friday after suffering significant losses in the previous session, as investors weighed ongoing geopolitical tensions in the Middle East against concerns over global supply and demand dynamics.

International benchmark Brent crude edged lower by 21 cents, or 0.22%, to trade at $95.24 per barrel in early Asian trading hours. The contract had closed nearly 2.8% lower on Thursday amid shifting market sentiment. Meanwhile, U.S. West Texas Intermediate (WTI) crude slipped 10 cents, or 0.11%, to $92.94 per barrel after recording a decline of more than 3% in the previous session.

Despite the recent pullback, both major crude benchmarks remain on course to post their first weekly gains in three weeks. WTI has risen by more than 6% over the week as traders continue to assess the potential impact of escalating regional tensions on global energy supplies.

Market participants remain focused on developments in the Middle East, where hopes for a diplomatic breakthrough have weakened. Efforts to secure a ceasefire in Lebanon suffered a setback after Hezbollah leader Naim Qassem rejected a U.S.-backed proposal aimed at ending hostilities between Israel and Lebanon. The group’s stance has complicated broader diplomatic initiatives in the region.

Iran has also linked progress in its discussions with Washington to the establishment of a ceasefire in Lebanon, adding another layer of complexity to negotiations. The ongoing uncertainty has kept energy markets on edge, particularly because of the strategic importance of the region to global oil flows.

U.S. President Donald Trump expressed cautious optimism on Thursday, stating that discussions involving Israel and Lebanon were moving forward and emphasizing that peace in Lebanon remained an important objective. However, investors remain skeptical about the prospects for a swift resolution.

Analysts noted that conflicting reports and rapidly changing developments continue to cloud the market outlook.

“Investor sentiment is being influenced by a constant stream of competing headlines, making it difficult to establish a clear direction for oil prices,” market analysts said, highlighting the uncertainty surrounding diplomatic efforts and military developments.

From a technical standpoint, analysts believe crude prices could remain supported if key price levels continue to hold. They noted that WTI crude remains above important support zones, suggesting that the risk of upward price movements persists despite recent declines.

Adding to market concerns are expectations of tightening global oil inventories. Several industry observers have warned that declining stockpiles could create supply pressures during the third quarter of the year, potentially pushing prices higher if demand remains resilient.

Attention is also focused on the Strait of Hormuz, a vital maritime route through which roughly one-fifth of the world’s oil supply is transported. Any disruption to shipping traffic in the waterway could have significant consequences for global energy markets. Although traffic remains operational, limitations and security concerns continue to be monitored closely by traders and shipping companies.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has maintained its forecast for oil demand growth in 2026. OPEC Secretary General Haitham Al Ghais reiterated that the organization expects global oil demand to increase by approximately 1.2 million barrels per day this year despite geopolitical tensions and concerns over regional supply disruptions.

On the supply side, Iranian oil exports have reportedly dropped to their lowest levels in six years. Industry data suggests that increased U.S. pressure on Iranian shipments has significantly reduced export volumes. However, weaker-than-expected demand from China, the world’s largest crude importer, has helped limit the upward pressure on prices.

As markets head into the weekend, traders are expected to remain highly sensitive to geopolitical developments, particularly any signs of escalation or diplomatic progress in the Middle East. The combination of regional conflict, supply concerns, and uncertain demand prospects is likely to keep oil prices volatile in the coming weeks.