Crude prices dipped slightly in early Friday trading, yet remain on track for a second consecutive weekly advance as the United States escalates its pledge to impose what it calls the harshest sanctions ever on Iran.

Treasury Secretary Scott Bessent said in an interview that the odds of a renewed large-scale military confrontation are low, but analysts note the market is already pricing in the failure of diplomatic efforts to resolve the standoff.

The international benchmark has climbed back to levels last seen in late July, though refined product prices—which hit consumers hardest—are facing even more pronounced upward pressure.

With hopes for a swift reopening of the Strait of Hormuz continuing to fade, oil prices pulled back on Friday but are still poised for a second straight weekly gain. Treasury Secretary Scott Bessent said Thursday in an interview that Washington will impose the toughest sanctions ever on Iran, echoing President Trump's earlier threat of devastating economic action. Bessent added that he does not understand why crude prices rose following the president's remarks, arguing that maximum economic pressure reduces the likelihood of a return to large-scale military strikes.

As of 4:50 a.m. Eastern Time on Friday, Brent crude was down 0.8%, while West Texas Intermediate crude for October delivery fell 0.89%. Even with the pullback, Brent is on pace to gain nearly 6% this month, following last week's 5.95% advance. On Thursday, the international benchmark settled above $93 per barrel for the first time since July 24. During the first two weeks of August, oil prices had retreated significantly after U.S. officials signaled a potential deal with Tehran could be reached soon.

Now that Washington has hardened its stance, the outlook for shipping through the Strait of Hormuz has become highly uncertain. Janiv Shah, vice president of oil market analysis at Rystad Energy, said in an interview Friday: "There is little visible progress on the diplomatic front, and the oil market is once again beginning to price in the failure of negotiation efforts."

"But the bigger pressure is visible in the refined products market. With concerns over short-term supply shortages, robust demand, and thin inventory buffers, diesel crack spreads have already hit record highs."

"While Brent prices may swing sharply depending on the scenario, we expect refined product markets to feel a more significant impact. Limited refining capacity combined with energy security concerns will keep crack spreads and refinery margins elevated across the board."