Oil prices rose by more than $1 per barrel on Friday, as traders remained on alert over potential supply disruptions after the United States and Iran agreed to extend nuclear negotiations.

Brent crude futures climbed $1.38, or 1.95%, to $72.13 per barrel by 11:10 GMT, while US West Texas Intermediate crude rose $1.40, or 2.15%, to $66.61 per barrel.

Tamas Varga, oil analyst at brokerage PVM, said uncertainty continues to dominate the market, with fears pushing prices higher, noting that current moves are entirely driven by the outcome of the Iranian nuclear talks and the possibility of US military action against Tehran.

Limited weekly gains

On a weekly basis, Brent crude is heading for a modest gain of about 0.2%, while West Texas Intermediate is set for a marginal decline of 0.1%.

The United States and Iran held indirect talks in Geneva on Thursday, after US President Donald Trump ordered a military buildup in the region.

During the negotiations, oil prices jumped by more than $1 per barrel following media reports suggesting discussions had stalled due to Washington’s insistence on a full halt to Iran’s uranium enrichment. However, gains were trimmed after the Omani mediator announced progress in the talks.

Omani Foreign Minister Badr Albusaidi said both sides plan to resume negotiations next week, with technical-level discussions scheduled to take place in Vienna.

Suvro Sarkar, analyst at DBS Bank, said the latest round of talks provides some hope for a peaceful resolution, but stressed that military strikes remain a possible scenario.

Trump stated on February 19 that Iran must reach a deal on its nuclear program within 10 to 15 days, otherwise “very bad things” would happen.

Sarkar estimated that the geopolitical risk premium currently embedded in oil prices ranges between $8 and $10 per barrel, amid fears that any conflict could disrupt Middle East supply flows through the Strait of Hormuz, which handles around 20% of global oil supply.

Saudi moves and OPEC+ meeting in focus

To mitigate the impact of a potential strike, informed sources said Saudi Arabia is working to increase oil production and exports.

At the same time, OPEC+ is expected to consider raising output by about 137,000 barrels per day for April during its meeting scheduled for March 1, after previously pausing production increases in the first quarter of the year.

The US dollar edged slightly lower on Friday but remained on track to post monthly gains, supported by escalating geopolitical tensions and a more hawkish tone from the Federal Reserve.

By 03:00 a.m. ET (08:00 GMT), the US dollar index — which measures the greenback against a basket of six major currencies — rose 0.1% to 97.650, heading toward a monthly gain of around 1.4%.

Tensions in the Middle East support the dollar

The dollar benefited from growing concerns that the US military buildup in the Middle East could lead to conflict with Iran, despite ongoing meetings between the two sides to discuss Tehran’s nuclear program.

Mediators from Oman reported that the United States and Iran made progress during talks on Thursday, but several hours of negotiations ended without a clear breakthrough that could prevent potential US strikes.

Analysts at ING said any escalation between Washington and Tehran could have the strongest impact on the dollar at this stage. They added that the probability of a US strike on Iran by the end of March remains relatively high at 55%, according to estimates from the Polymarket platform, preventing markets from betting aggressively on further dollar weakness for now.

The dollar also received additional support from a relatively more hawkish tone at the Federal Reserve, after “several” policymakers at the January meeting signaled openness to raising interest rates again if inflation remains elevated.

US producer price index data for January is due later in the session, alongside scheduled remarks from Fed officials John Williams and Neel Kashkari.

Euro weakens amid European economic softness

In Europe, EUR/USD rose 0.1% to 1.1806, but the single currency is heading for a monthly loss of more than 1%, amid expectations that the European Central Bank will keep interest rates unchanged for several months.

Germany’s unemployment rose slightly in February by 1,000 people to 2.977 million, reflecting the ongoing impact of economic weakness over the past three years on Europe’s largest economy.

In France, consumer prices increased 1.1% year-on-year in February, beating expectations and signaling faster inflation after it had slowed in January to its lowest level in more than five years.

ING analysts said the 1.180 level could remain a pivot point for EUR/USD, as uncertainty related to Iran continues to limit strong directional bets in the market.

Pound slips after election setback

GBP/USD rose 0.1% to 1.3495, but the pound is set to end a three-month winning streak after falling more than 2% in February.

Britain’s Labour Party, led by Prime Minister Keir Starmer, suffered an embarrassing electoral defeat after losing one of its safest seats to the left-wing Green Party.

The development increases pressure on Starmer to demonstrate his leadership credentials after weeks of political turbulence and growing calls for his resignation. ING analysts noted that developments weakening Starmer’s position tend to weigh on the pound, particularly if they raise the probability of a more left-leaning leadership emerging.

Yen heads for monthly loss amid policy uncertainty

In Asia, USD/JPY fell 0.1% to 156.04 but remains on track for a monthly gain of around 0.6%, as the Japanese currency continues to struggle amid questions about the fiscal impact of stimulus plans and tax cuts proposed by Prime Minister Sanae Takaichi.

The ruling coalition’s landslide victory in Japan’s lower house has given Takaichi a clearer path to pass her fiscal agenda.

The yen also faced additional pressure due to rising uncertainty over the timing of the Bank of Japan’s next rate hike, especially after weak Tokyo core CPI data for February showed inflation falling below the central bank’s 2% target for the first time in nearly four years.

Moves in Asian and Australian currencies

USD/CNY rose 0.2% to 6.8552 after the People’s Bank of China removed the foreign-exchange risk reserve requirement on some forward contracts, a move that allows cheaper dollar purchases within the country.

The decision followed a strong rally in the yuan in recent months, partly driven by exporters selling US dollars amid a strong trade surplus with the United States.

Meanwhile, AUD/USD climbed 0.3% to 0.7125, with the Australian dollar heading for gains of more than 2% this month, supported by more hawkish expectations regarding Reserve Bank of Australia policy.

Gold prices edged higher in European trading on Friday, maintaining gains for a third consecutive session near a four-week high and moving toward a seventh straight monthly advance, supported by safe-haven demand and a weaker US dollar in the foreign exchange market.

Although expectations for a Federal Reserve rate cut in March have declined, markets are waiting for further evidence on the direction of US monetary policy throughout this year.

Price Overview

• Gold prices today: Gold rose by 0.3% to $5,200.61 an ounce, up from the session open at $5,184.78, after touching an intraday low of $5,167.10.

• At Thursday’s close, gold gained 0.4%, marking a second consecutive daily increase and approaching a four-week high of $5,249.88 per ounce.

Monthly Performance

• Over the course of February — which officially concludes at today’s settlement — gold prices are up around 6.25%, on track for a seventh consecutive monthly gain, marking the longest winning streak in two years.

• The latest monthly rise is attributed to continued buying by central banks, institutions, and individual investors viewing the precious metal as a preferred alternative investment amid global geopolitical and economic tensions, as well as renewed concerns over US assets due to what markets see as unpredictable Trump policies.

US Dollar

The US dollar index declined by about 0.2% on Friday, reflecting weaker performance of the American currency against a basket of major and minor currencies.

This decline comes as the yield on the 10-year US Treasury fell to a three-month low amid increased demand for safe-haven assets, driven by renewed concerns about slowing global growth under the pressure of potential trade wars.

President Donald Trump’s State of the Union address in Congress added to market uncertainty, as it failed to provide sufficient reassurance regarding trade policy stability following the Supreme Court ruling that invalidated earlier tariffs.

US Trade Representative Jamieson Greer said on Wednesday that tariff rates on some countries could rise to 15% or more, compared with the recently imposed 10%, without specifying which trading partners would be affected or providing further details.

US Interest Rates

• Federal Reserve Governor Christopher Waller said he is open to keeping interest rates unchanged at the March meeting if February employment data indicates the labor market has “stabilized” after weak performance in 2025.

• According to CME Group’s FedWatch tool, markets currently price a 96% probability that interest rates will remain unchanged in March, with odds of a 25-basis-point cut at 4%.

• Investors continue to monitor incoming US economic data and comments from Federal Reserve officials to reassess these expectations.

Gold Outlook

ANZ market analyst Soni Kumari said there are two main factors supporting gold: ongoing uncertainty surrounding tariffs and the situation between Iran and the United States.

Linh Tran, senior market analyst at XS.com, said recent rounds of US-Iran talks failed to produce a clear outcome, keeping geopolitical risks present without leading to escalation.

Tran added that this has helped keep gold prices elevated, although it has not yet provided enough momentum to establish a sustainable upward trend.

SPDR Gold Trust

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 0.28 metric tons on Thursday — marking the fourth consecutive daily increase — bringing total holdings to 1,097.90 metric tons, the highest level since April 26, 2022.

The euro rose in European trading on Friday against a basket of global currencies, moving into positive territory versus the US dollar ahead of key inflation data from Germany, the largest economy in the euro area.

These figures are expected to provide further clues about the path of European interest rates this year, especially after Christine Lagarde emphasized that future monetary policy decisions will be data-dependent and assessed on a meeting-by-meeting basis rather than following a fixed path.

Price Overview

• Euro exchange rate today: the euro rose 0.15% against the dollar to $1.1813, from an opening level of $1.1797, recording a session low at $1.1789.

• The euro closed Thursday down 0.1% against the dollar, pressured by Lagarde’s testimony before the European Parliament in Brussels.

Christine Lagarde

ECB President Christine Lagarde delivered key remarks yesterday before the European Parliament’s Committee on Economic and Monetary Affairs, highlighting the following points:

• Efforts to reduce inflation are beginning to bear fruit, with headline inflation declining from 2.5% in January to 2.3% in February.

• Inflation is expected to stabilize around the ECB’s 2% target over the medium term, specifically by the first quarter of 2026.

• She defended the bank’s decision to keep interest rates unchanged, stressing that future decisions will depend on incoming data at each meeting, without pre-committing to a rate-cut path.

European interest rates

• Money markets are currently pricing a roughly 25% chance that the European Central Bank will cut rates by 25 basis points in March.

• Traders have shifted expectations from keeping rates unchanged throughout the year to pricing in at least one 25-basis-point rate cut.

• Investors are awaiting Germany’s February inflation data later today, which could reshape these expectations.

Outlook for the euro

Our expectation: if German inflation data comes in stronger than market forecasts, the probability of ECB rate cuts this year could decline, which would likely support further gains in the euro against a basket of global currencies.