Oil Price Today (September 4): Crude oil at $96, set for a 7% weekly surge as Iran, US exchange attacks. What’s next?

Oil prices rose half a percent on Friday and were headed for their biggest weekly increase since mid-July as renewed hostilities between the US and Iran intensified concerns over potential disruptions to oil supplies from the Middle East.

The latest US attacks, which killed and wounded dozens of people, including Iranian civilians, have resulted in the most intense clashes between the two countries since July. The conflict, which began with US-Israeli strikes at the end of February, has now entered its seventh month.

Crude oil price on September 4

Brent crude futures gained 48 cents, or 0.5%, to $96 a barrel, while US West Texas Intermediate crude futures rose 55 cents, or 0.58%, to $92. Brent was up over 7% for the week, while WTI had climbed 9.8%, putting both benchmarks on track for their strongest weekly gains since the week ended July 20.


Also read: Trump aides seek 'quiet' in Iran war but say attacks may intensify after November elections

Israeli Defence Minister Israel Katz again warned that Israel would "cripple" Iran's military and civilian infrastructure, including energy facilities. US Vice President JD Vance said on Thursday that Washington would not hold talks with Tehran unless Iran stopped attacking commercial shipping in the Strait of Hormuz.

US President Donald Trump said on Wednesday that the renewed US campaign against Iran would not continue for "too long". He said US forces had struck Iranian radar and missile systems. Trump also said the US had destroyed "all of the new equipment" Iran had sought to build along the Strait of Hormuz, including defensive and offensive systems. He described the attack as "very heavy" and said US forces were ready to launch another attack at any time.

Iran, meanwhile, has expanded its list of vessels it considers non-compliant and which could face fines, confiscation or detention if they try to pass through the Strait of Hormuz. Iraqi ships remain among the few vessels that Tehran has allowed to transit the strait.

Where are oil prices headed?

For oil markets, how long the disruption lasts will be a key factor. JPMorgan estimates that every additional month of disruption could push Brent prices up by around $7 to $8 a barrel. If the disruption continues for three months, the bank expects average monthly Brent prices to reach around $114 a barrel.

Goldman Sachs has similarly warned that Brent could rise to $120 a barrel if shipping disruptions through the Strait of Hormuz, the world's most important oil transit route, continue. Its base case, however, assumes that tensions in the Middle East will eventually ease. The bank expects Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year, while noting that the risks remain tilted to the upside if disruptions in the Strait of Hormuz and the Red Sea persist for longer than expected.

Read more: JD Vance says Iran conflict is not a war, declines to offer timeline for end

Ponmudi R, CEO of Enrich Money, said crude prices would remain closely linked to developments around the Strait of Hormuz. He said a sustained recovery in shipping flows could further reduce the geopolitical premium in crude and provide relief to emerging-market equities, while another disruption could quickly reverse that trend.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)