Oil prices rise as U.S.-Iran hostilities threaten supply through Strait of Hormuz

Oil prices rose Friday as investors weighed escalating tensions between the U.S. and Iran after Tehran vowed to target regional infrastructure if President Donald Trump followed through on threats to strike the country's key facilities. 

International benchmark Brent crude futures with September delivery advanced 0.9% to trade at 85.01 per barrel, paring gains from earlier in the session.

Meanwhile, U.S. West Texas Intermediate futures with August delivery gained 1% to trade at $79.74, having settled at its highest level since June 15 on Thursday.

Both oil contracts are up more than 11% so far this week and on track for their best weekly performance since late April.

U.S. Central Command said overnight that it had completed its sixth consecutive night of strikes against Iran, hitting dozens of military targets such as military logistics infrastructure and maritime capabilities.

In a social media post, Centcom said more than 50,000 service members were operating across the Middle East, adding that they "remain vigilant, lethal, and ready."

International benchmark Brent crude futures with September delivery advanced 0.9% to trade at 85.01 per barrel, paring gains from earlier in the session.

The escalating standoff comes as the fragile truce reached last month has fractured, once again disrupting energy flows through the strategically vital Strait of Hormuz, which typically handles around 20% of the world's oil traffic.

Brent crude futures and West Texas Intermediate futures over the last six months.

In an interview with Fox News on Tuesday, Trump said U.S. forces would target Iran's infrastructure next week unless the two sides reached a diplomatic breakthrough.

Responding in a statement posted on Telegram on Thursday, a spokesperson for Iran's top military command warned that if Trump's threats were carried out, "everything that is still intact … that is, all the infrastructure in the region – will be crushed." 

Iran has also asked Yemen's Houthis to be ready to close the Red Sea oil route if the U.S. targets Iranian power infrastructure, Reuters reported Thursday, citing three unnamed sources. CNBC could not independently verify this report.

Jorge León, senior vice president at Rystad Energy, wrote in a note on Friday that a limited agreement between Washington and Tehran remained the firm's base case scenario, though confidence in that outcome had weakened.

He added that both sides still had strong economic incentives to avoid a complete breakdown in talks, with the U.S. seeking lower oil prices ahead of the November midterm elections and Iran reluctant to forgo economic incentives.

"Tehran has a substantial economic package on the table, including access to frozen assets and export waivers, that it does not want to walk away from permanently," León said.