Oil prices ease but are set for 10% weekly gain as Trump mulls 'bigger than ever' attack on Iran

• Brent crude heading toward 9.7% weekly gain at $96.72/barrel, while WTI up 8% for the week at $89.06/barrel despite Friday's 4% decline
• U.S. Central Command completed 13 consecutive nights of strikes on Iranian military targets, with Trump stating Iran has not 'received enough pain yet' and considering unprecedented large-scale attack
• Growing instability around Strait of Hormuz and Red Sea shipping routes has created sizeable geopolitical risk premium, though UBS expects Brent to fall to $85/barrel by year-end as market may be overestimating recovery timeline

Oil Prices Summary: U.S.-Iran Conflict Drives 10% Weekly Surge

Key Price Movements

Oil prices declined approximately 4% on Friday but remained on track for significant weekly gains amid escalating U.S.-Iran tensions. Brent crude traded at $96.72 per barrel (down 4%), posting a 9.7% weekly increase. West Texas Intermediate (WTI) fell 3.4% to $89.06 per barrel, up 8% for the week.

Geopolitical Developments

The U.S. Central Command conducted its 13th consecutive night of strikes on Iran, targeting military infrastructure including command centers, drone facilities, and coastal surveillance sites near the Strait of Hormuz. Over 50,000 U.S. service members are currently deployed across the Middle East.

President Trump indicated he is considering a "massive attack" on Iran, describing it as potentially "bigger than ever before." The escalation followed reported Houthi attacks on two Saudi Arabian oil tankers in the Red Sea. Trump warned Iran would be held responsible for further Houthi actions, threatening "major military punishment."

Market Implications

Analysts note a "sizeable geopolitical risk premium" has returned to oil markets due to instability around critical shipping routes, particularly the Strait of Hormuz and Red Sea. These disruptions raise concerns about global trade, energy security, and elevated inflation risks.

UBS Global Wealth Management suggests markets may be overestimating recovery prospects, expecting production restoration to proceed slower than anticipated due to depressed vessel flows. However, UBS forecasts Brent crude will fall to $85 per barrel by year-end, indicating expected moderation from current levels.

The continued conflict keeps energy markets tight with uncertainty unlikely to fade near-term.