Oil prices edged lower Friday after surging past $100 in the previous session, as traders weighed the risk of further Middle East supply disruptions against expectations that higher US interest rates could weaken demand.
International benchmark Brent crude traded at $99.92 per barrel at 10.04 a.m. local time (0704 GMT), down 0.7% from the previous close of $100.69.
US benchmark West Texas Intermediate (WTI) traded at $90.53 per barrel, down around 1.8% from $92.19 in the previous session.
Prices surged Thursday as threats to oil shipments through the Strait of Hormuz and Bab el-Mandeb, along with fears of attacks on energy infrastructure across the Middle East, raised concerns about supply disruptions.
Brent futures climbed to their highest level since May 27 after fresh warnings from Washington and Tehran, reports of attacks on Saudi oil tankers and an explosion involving a vessel in the Strait of Hormuz.
Yemen’s Houthi group said earlier Thursday that they carried out a military operation targeting two Saudi oil tankers with ballistic and cruise missiles, as well as drones.
While the risk of the conflict spreading from the Strait of Hormuz to the Red Sea kept supply concerns elevated, expectations that physical supplies would remain resilient helped limit the rise in prices.
US President Donald Trump is considering launching a new military operation against Iran that could surpass the scale of the US strikes from Operation Epic Fury earlier this year, Axios reported Thursday.
In an interview with the outlet, Trump said he was nearing a decision on a potential major attack but stressed that no final determination had been made. Two US officials also told Axios that no new military orders have been issued.
"I am considering a massive attack. Bigger than ever before. I am close to making a decision. We are all set for it," Trump said.
He also said Israel could join the operation almost immediately if requested, but maintained that the US would not require assistance from another country to carry out a new campaign against Iran.
According to Axios, Trump said Iranian officials want to negotiate but have not yet agreed to the latest proposal presented through mediation efforts.
"They haven't received enough pain yet," he said.
Citing two regional sources familiar with the mediation efforts, Axios reported that Iran's leadership had not accepted the latest proposal.
One source said: "We are trying, but the Iranians are not being helpful."
In a post on Truth Social, Trump previously warned that Washington would hold Tehran responsible for any further Houthi attacks on Red Sea shipping, arguing that "major military punishment will be inflicted upon Iran and, of course, the Houthis themselves."
The region has been on high alert since the US and Israel launched a joint offensive against Iran in February. Tehran responded with missile and drone attacks targeting Israel and US military assets across the Gulf.
Although the two sides last month signed a Pakistani-mediated framework agreement to end the conflict, tensions were sparked again in the Strait of Hormuz, prompting a new exchange of strikes and renewed US threats of military action.
Meanwhile, Iran on Thursday rejected a US ceasefire proposal delivered by Iraqi Prime Minister Ali al-Zaidi, the New York Times reported, as fighting between the two countries continued for nearly two weeks.
Citing Iranian and Iraqi officials familiar with the matter, the newspaper said al-Zaidi carried the proposal during a visit to Tehran after recently meeting with US President Donald Trump at the White House.
The report said details of the proposal were unclear, but Iranian officials described it as the only proposal currently offered.
Tehran rejected it, they reportedly said, because it did not resolve the issue of control over the Strait of Hormuz.
US forces launched strikes against Iranian targets for the 13th consecutive night early Friday, US Central Command (CENTCOM) has announced.
Thursday’s surge in oil prices also added to concerns about inflation and economic growth, fueling expectations that central banks could take a more hawkish approach in the coming months.
Money markets increasingly priced in two Fed rate hikes by the end of the year. After a possible increase in September or October, the probability of another hike in December rose to 78%.
Higher US interest rates are expected to slow economic activity and weaken oil demand, putting downward pressure on prices.
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr
