Oil prices held steady Friday after Iranian President Masoud Pezeshkian signaled Tehran wants to end the war with the U.S. sooner rather than later. Brent crude closed the week more than 5% higher after Treasury Secretary Scott Bessent said Washington will impose its toughest-ever sanctions on Iran, even as he downplayed the odds of renewed large-scale combat.
Iran signals it wants the war to end
Brent crude futures added 61 cents to close at $94.39 a barrel, while U.S. West Texas Intermediate futures rose 23 cents to $87.06. The moves came after Pezeshkian described a U.S.-Iran memorandum of understanding as a victory for the Islamic Republic. Pezeshkian said ending the war now was preferable, while Iran holds a position of strength, according to state news agency PressTV.
That memorandum, signed June 17, let Tehran negotiate with Oman and other Gulf states over how the Strait of Hormuz is administered. But prices had already climbed through the week after Bessent told CNBC that the U.S. will impose its toughest-ever sanctions against Iran and that Washington intends to collapse the regime in Tehran, echoing threats from President Donald Trump.
Sanctions pressure without a return to combat
According to CNBC: "traders had misinterpreted the Trump administration's threats by bidding up oil prices", Bessent said, adding that the economic pressure campaign means the U.S. likely won't return to large-scale combat against Iran. Yet Helima Croft, head of global commodity strategy at RBC Capital Markets, noted Iran is already one of the world's most sanctioned countries and it isn't clear whether Washington will also target its partners China and Russia.
The U.S. military told CNBC it has helped tankers move more than 660 million barrels of oil through the Strait of Hormuz since early May. Croft said the strait isn't closed, but the war is still costing the market about 8 million barrels a day out of the roughly 20 million bpd that normally passes through it. She flagged tight diesel supply, driven by Ukrainian strikes on Russian refineries and Middle East outages, as the market segment to watch most closely.
WTI presses against resistance
Crude had eased through early August as officials suggested a deal to boost traffic through Hormuz was close, then reversed once no agreement materialized and rhetoric escalated again. On the charts, WTI tested $86.90 on the five-hour chart, just below its $88.07 resistance level, with the price trading above its 200-period simple moving average near $78.72. An RSI reading of 65.98, together with the price's proximity to the upper Bollinger Band, pointed to waning momentum and rising odds of a reversal if the resistance holds. Oil remains well below its wartime peak even after the week's gains.
Sources: CNBC, Investing.com
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