Oil prices edged lower on Friday, heading toward their second consecutive weekly decline
Concerns regarding a potential flare-up of conflict in the Middle East have eased. While the U.S. blockade against Iran remains in place, attacks on maritime shipping continue to pose a risk to supply.
As of GMT 05:27, Brent crude futures fell 28 cents (0.29%) to $95.54 per barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 56 cents (0.63%) to $88.18 per barrel.
Brent crude is on track for a 2.9% decline this week, following a 16% drop the previous week. WTI crude is also heading toward a 2.9% decline this week, after falling 13% the week prior.
Friday’s losses wiped out gains made over two days during what has been a highly volatile week. There had been an expectation of a de-escalation in the conflict involving the U.S., Israel, and Iran—now in its ninth month—but attacks by the Houthis on Saudi Arabian infrastructure and on tankers carrying crude oil through the Gulf have dispelled that optimism.
In a statement, Trump remarked that reaching an agreement with Iran is not necessary to end the war. Whether Iran itself cares about this is, of course, another matter. However, signals from Trump suggesting that a military escalation against Iran might not be necessary have fueled expectations that Washington may lean more heavily on economic sanctions and restrictions on oil shipments, rather than intensifying military operations.
The weakness in oil prices stems largely from signs of declining demand in the United States. Meanwhile, an increase in crude oil and fuel inventories points to a relatively weak consumption outlook.
On Thursday, the U.S. Energy Information Administration (EIA) reported that U.S. crude oil and fuel inventories rose last week, driven by a drop in demand for refined products and a surge in oil imports.
Geopolitical risks remain high; any new disruption to oil supplies could quickly reignite upward pressure on prices.
Despite the easing in prices, risks persist regarding oil shipments passing through the Strait of Hormuz—a vital route for crude oil exports from major Middle Eastern producers.
On Thursday, the Iranian military announced that four oil tankers in the Strait of Hormuz had sustained damage following explosions that occurred after the vessels reportedly ignored warnings.
On the same day, the Houthi movement in Yemen claimed responsibility for attacks on a pumping station along Saudi Arabia’s East-West oil pipeline, an oil facility in the Red Sea port city of Yanbu, and an Aramco building in the capital, Riyadh.
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