Oil rises 12% in week as US-Iran tensions mount
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Oil prices surged 12% over the past week, driven by escalating tensions between the United States and Iran. The rally pushed Brent crude above $85 per barrel for the first time since April. Markets are now pricing in a risk premium as diplomatic channels remain stalled.
The Price Surge
Brent crude futures settled at $85.32 on Friday, up 12% from $76.10 a week earlier. The jump marks the largest weekly gain since the start of the Russia-Ukraine war in 2022. Analysts at Goldman Sachs attribute the move to a combination of supply fears and speculative buying.
Geopolitical Drivers
The rally follows the breakdown of nuclear talks between the U.S. and Iran in Vienna last week. Iran has since resumed enrichment activities at Fordow, while the U.S. deployed an additional carrier strike group to the Persian Gulf. The Strait of Hormuz, through which 20% of global oil passes, is now considered a flashpoint.
Market Impact
The price spike has already affected fuel costs in Kazakhstan, with AI-95 gasoline rising to 245 tenge per liter, up 8% in a week. The National Bank warned that sustained oil above $85 could push inflation above the 8% target band. Kazakhstan's budget for 2026 is based on an average oil price of $70 per barrel.
Iran War Enters Fifth Week
Oil surged over $115 a barrel as the war in Iran entered its fifth week. Houthi strikes on Israel raised concerns of disruption to shipping through the Bab el-Mandeb strait, compounding supply pressure from the Strait of Hormuz closure.
What's Next
The U.S. and Iran are scheduled to hold indirect talks in Oman on July 20-21, but expectations for a breakthrough remain low. It remains unclear whether OPEC+ will adjust its production quotas at its next meeting on August 3 to cool the market.
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Oil rises 12% in week as US-Iran tensions mount
