Oil prices moved slightly higher on Friday, capping a week marked by significant swings. Brent crude traded above $64 per barrel, recovering from a 4.2% plunge on Thursday, its steepest decline since June.
According to a New York Times report, Israeli Prime Minister Benjamin Netanyahu requested that U.S. President Donald Trump delay plans for an attack on Iran. This development has lowered expectations of an immediate American military response to recent violent protests in Iran, which had raised concerns over potential disruptions to oil production or shipping.
Fox News, citing military sources, reported that Washington is increasing its military presence in the Middle East. At least one aircraft carrier is being deployed to the region, with additional assets expected to follow in the coming days and weeks. Traders have historically adjusted bearish positions ahead of weekends during periods of elevated geopolitical risk.
"While the risk of imminent intervention from the U.S. against Iran has subsided, it's pretty clear that the risk is still present, which should keep the market on its toes in the short term," said Warren Patterson, head of commodities strategy at ING Groep NV. "However, the longer this goes on without a U.S. response, the risk premium will continue to evaporate, allowing more bearish fundamentals to take center stage."
Oil is poised to close the week with a modest gain. Prices had surged from January 8th on fears the U.S. might target Iran, OPEC's fourth-largest producer, threatening over 3 million barrels of daily output. Additional factors supporting prices include disruptions to Kazakh exports from the Black Sea, short-term supply tightness in the North Sea, and various financial flows from options markets to commodity index rebalancing. This comes after oil experienced its largest drop since 2020 due to rising supplies.
In a sign that lower prices are having an impact, billionaire wildcatter Harold Hamm, a key figure in the U.S. shale revolution, stated his company Continental Resources Inc. is preparing to halt drilling in North Dakota's Bakken region. Hamm attributed the decision to low crude prices.