Crude dips but eyes weekly gain as US-Iran conflict stokes supply fears

Oil prices edged lower in early trade on Friday but remained on course for strong weekly gains as renewed military exchanges between the United States and Iran kept concerns over global crude supplies elevated.Brent crude futures fell 6 cents, or 0.08%, to $76.24 a barrel by 0125 GMT, while US West Texas Intermediate (WTI) crude slipped 4 cents, or 0.06%, to $72.04 a barrel, , Reuters reported.Despite Friday's modest decline, Brent was set to post a 6% weekly gain, while WTI was on track to rise 5% for the week.US-Iran conflict continues to support pricesOil markets remained focused on developments in the Middle East after Iranian armed forces launched attacks on US military infrastructure in Gulf states on Thursday, following American strikes on military targets in Iran's southern coastal and eastern provinces.Iranian media also reported multiple explosions across southern Iran, including in Bushehr, home to one of the country's nuclear power plants.The renewed fighting came on the day Iran buried its slain Supreme Leader Ayatollah Ali Khamenei, who was killed on the opening day of the conflict on February 28, marking the culmination of a week of nationwide funeral processions and rallies.Strait of Hormuz disruption remains key concernThe conflict has delayed the full reopening of the Strait of Hormuz, one of the world's most critical energy chokepoints through which roughly 20% of global daily oil and gas supplies passed before the war.Supply concerns have continued to underpin crude prices, although analysts noted that markets found some reassurance in Washington's approach."Despite the US ramping up attacks on military sites in Iran, the market drew some reassurance from the Trump administration's decision to avoid targeting Iranian energy infrastructure," Daniel Hynes, senior commodity strategist at ANZ Bank, told Reuters.He added that the market was also supported by comments from US President Donald Trump, who said he did not expect the conflict to escalate into a prolonged war.Trump said on Wednesday: "Anything that happens is going to be over very quickly."Inflation concerns limit gainsWhile geopolitical risks supported prices, worries over slowing global demand prevented a sharper rally.Concerns over accelerating inflation weighed on sentiment, as higher prices could weaken fuel consumption.In the United States, fresh data showed initial jobless claims declined last week, suggesting the labour market remains in what economists describe as a "slow-hire, slow-fire" phase.Meanwhile, in China, the world's second-largest economy, producer price inflation surged to its highest level in four years in June, increasing pressure on manufacturers as weak domestic demand continued to squeeze profit margins.Get the latest business news and top stories. Download the TOI App.Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.