Oil surged by nearly 3% amid heightened Middle East tensions, weaker dollar

Oil prices surged nearly 3% on Friday, 23 January 2026, as escalating Middle East tensions and a sharply weaker dollar reignited risk premiums across energy markets.

Brent crude settled at $65.88 per barrel, up 2.8%, while WTI advanced 2.9% to close at $61.07 per barrel, marking a decisive rebound from the previous session’s sell-off.

Sentiment shifted abruptly after Washington announced the deployment of a naval armada to the Middle East, alongside a direct warning to Tehran over its nuclear programme and mounting domestic unrest. The renewed threat of kinetic conflict in the Persian Gulf has prompted traders to reprice geopolitical risk, particularly the potential for maritime disruptions in a corridor critical to global oil supply.

Upward pressure was reinforced by firming refined product prices, with diesel and heating oil gaining as a severe winter storm drives demand across the US Northeast.

The rally was further underpinned by currency dynamics. The US dollar suffered its steepest weekly decline in seven months amid strained US–Europe relations and stalled efforts to resolve the war in Ukraine. The weaker dollar lowered the cost of dollar-denominated commodities for international buyers, providing additional support to crude prices.

Written by: Aiman Haikal