Oil Tops $106 as Iran Conflict Tightens Supply; Dollar Rises

Brent crude rose above $106 a barrel on Friday as fighting linked to Iran and disruptions in the Strait of Hormuz reduced seaborne flows and tightened global supply.

Oil gained about 5% on the week as traders priced in a prolonged disruption of the shipping lane. The U.S. Dollar Index strengthened more than 1% over the week after Federal Reserve officials signaled rates would remain higher for longer.

Federal Reserve Bank of New York President John Williams noted “no need right now to weigh any change in interest rate policy” amid Middle East uncertainty. The U.S. Senate confirmed Kevin Warsh as Fed chair, and market participants expect that will shape policy expectations. Market pricing on CME FedWatch reduced bets on rate cuts in 2026 and 2027.

U.S. data were mixed. Retail sales rose 0.5% in April, matching forecasts, while initial jobless claims ticked up modestly, indicating a still-resilient labor market. Those figures, together with higher energy costs, kept bond yields elevated.

Equities diverged. The S&P 500 extended its 2026 rally toward the 7,500 level and new record highs. Asia-Pacific indexes opened lower after the Trump-Xi summit ended and Chinese President Xi Jinping warned that mishandling Taiwan could push relations to “a very dangerous place.” The Nikkei, Kospi and Hang Seng were trading down at the Asian open.

Precious metals and other commodities moved with the dollar and rates. Spot gold fell about 0.6% to roughly $4,619.50 an ounce for the week, and silver dropped about 2.8%.

Tokyo's Nikkei broke below a month-long rising channel that began at the end of March. Traders noted short-term support around the 61,000 to 61,200 area, with a deeper pullback potentially testing levels near 60,800.

Market watchers are focused on fallout from the Trump-Xi talks and U.S. industrial production for April, due later in the Asian trading day. Any further disruption to energy flows through the Strait of Hormuz will continue to influence oil prices and inflation data.

The Strait of Hormuz carries a large portion of seaborne oil and gas exports; sustained interruptions there tighten global supplies and tend to push benchmark Brent higher.