Oil prices fell slightly on Friday as an India-flagged tanker carrying gasoline bound for Africa passed through the eastern exit of the Strait of Hormuz, while the United States introduced measures to ease supply disruptions caused by the ongoing conflict in the Middle East. Despite the retreat, crude benchmarks remained set for weekly gains, reflecting continued market concerns over the geopolitical situation.
Brent crude for May delivery dropped 92 cents, or 0.9%, to $99.54 a barrel in afternoon trading, but it is on track for an 8% rise over the week. US West Texas Intermediate (WTI) crude for April delivery fell $1.64, or 1.7%, to $94.09 a barrel, and was heading for a 4% weekly increase.
Tamas Varga, an oil analyst at brokerage PVM, said that while some oil is moving through the strait, the passage does not signal a full reopening. “This dip should be viewed as short-lived,” he said.
The US Treasury issued a 30-day license allowing countries to purchase Russian oil and petroleum products that are currently stranded at sea. Treasury Secretary Scott Bessent described the move as an effort to stabilize global energy markets disrupted by the US-Israel conflict with Iran. The waiver affects about 100 million barrels of Russian crude, nearly equivalent to a day’s worth of global oil production, according to Kirill Dmitriev, Russia’s presidential economic envoy.
“Russian oil was already going to buyers; this is not bringing additional barrels to the market but it does reduce some friction,” said Bjarne Schieldrop, chief commodities analyst at SEB. Analysts cautioned that ongoing damage to Middle East energy infrastructure could cause longer-term supply shortages.
The US Energy Department also announced a release of 172 million barrels from the Strategic Petroleum Reserve, coordinated with a broader 400 million-barrel release from the International Energy Agency. While this initially eased prices, the reprieve was short-lived as Middle East tensions surged.
Iran’s new Supreme Leader, Ayatollah Mojtaba Khamenei, confirmed the country would continue to block the Strait of Hormuz, using it as leverage against the US and Israel. Iraqi security officials reported that two tankers in Iraqi waters were hit by explosives-laden Iranian boats, and the country’s oil ports have ceased operations.
Both Brent and WTI jumped more than 9% on Thursday, reaching their highest levels since August 2022. Goldman Sachs now expects Brent to average above $100 a barrel in March, with WTI averaging $85 in April, reflecting the ongoing volatility caused by Middle East supply disruptions.
Emril Jamil, senior analyst at LSEG, said Brent prices remain better supported than WTI due to Europe’s greater exposure to energy security risks, while the US can rely on domestic production. Reports also indicate that Iran has deployed roughly a dozen mines in the Strait of Hormuz, complicating any potential reopening.
Treasury Secretary Bessent told Sky News that the US Navy, potentially alongside an international coalition, would escort vessels through the strait once conditions allow, aiming to reduce further disruption to global oil flows.
Oil markets are expected to remain volatile in the coming weeks as the conflict in the Middle East continues to affect both supply and investor sentiment.
