Crude oil prices experienced a sharp decline of approximately 3% on Friday, putting the market on course for significant weekly losses as more oil tankers successfully exited the Strait of Hormuz. This movement of vessels has helped alleviate global supply concerns, despite a recent attack on a cargo ship in the region.
By early Friday afternoon, Brent crude futures had fallen 3.2%, or $2.42, dropping to $72.84 a barrel, while U.S. West Texas Intermediate (WTI) lost 2.7%, or $1.97, to sit at $69.95. The Brent benchmark is heading toward a substantial weekly decline of roughly 9.7%, with WTI trading about 8.8% lower compared to its close the previous Thursday. According to PVM analyst Tamas Varga, the prevailing market sentiment is currently driven by a view of “imminent oversupply”.
Adding to the easing of supply pressures, refining giant Saudi Aramco resumed oil loading operations at its Ras Tanura terminal in the Gulf. This resumption marks the end of a nearly four-month halt at the terminal, with shipping data confirming that two Very Large Crude Carriers—each capable of holding 2 million barrels—have already loaded crude, while a third waits nearby.
Despite the drop in prices, geopolitical tensions in the region remain highly elevated. Both benchmark contracts had briefly jumped more than 2% on Thursday after a cargo vessel was struck by an unknown projectile near Oman. U.S. officials reported that Iran fired on the ship as it attempted to transit the strait, prompting the U.N.’s shipping agency to suspend its voluntary evacuation scheme. On Friday, Iran reasserted its claim to control shipping through the Strait of Hormuz, stating that the security of vessels traveling outside designated routes is not guaranteed, and issued warnings to Gulf states against aligning with the United States.
While crude shipments through the vital waterway have risen this week to their highest levels since the U.S.-Israeli conflict with Iran began in late February, overall traffic is still well below the daily average seen before the war. Analysts at Commerzbank warned that if transit numbers do not continue to robustly increase, market skepticism could grow, potentially driving oil prices back up.
In other global energy developments, Russian authorities are reportedly considering implementing a multi-month ban on diesel exports. Although traditionally a major exporter of diesel, Russia is currently grappling with domestic fuel supply issues stemming from extensive damage to its oil refineries and energy infrastructure caused by Ukrainian drone strikes.