Oil prices fell on Friday for the first time in six days, but are poised for their sharpest weekly rise since 2022
The conflict in the Middle East is disrupting oil supply and impacting global energy prices. The US is granting exemptions for oil purchases from Russia to ease supply restrictions. The US is considering intervening in the futures market to curb rising prices, and oil prices fell on Friday for the first time in six days after granting exemptions for oil purchases from Russia to ease supply restrictions stemming from the Middle East conflict.
Brent crude futures fell 95 cents, or 1.1%, to $84.46 a barrel as of 04:40 GMT, while WTI crude fell $1.08, or 1.3%, to $79.93.
Nevertheless, Brent crude is up 16.4% this week, while WTI is on track for its sharpest weekly gain since Russia launched its all-out invasion of Ukraine in February 2022.
Since the conflict began on February 28, the Middle East's key energy-producing region has been in flames. The conflict has caused disruptions to production, leading to the closure of refineries and liquefied natural gas facilities.
The problem in the Strait of Hormuz is escalating and will have two major impacts on oil: a 20 million barrel per day oil storage shortage and a lack of global oil flow, driving up global energy prices.
Despite potentially higher gains for US oil, the US Treasury Department is expected to announce measures to offset rising energy prices stemming from the Iran conflict.
These measures could include actions involving the oil futures market. Such a move would be an unusual attempt by Washington to influence energy prices through financial markets rather than physical oil supply.
The U.S. Treasury Department also allowed the storage of sanctioned Russian oil in tankers on Thursday to ease supply restrictions that have forced refineries in Asia to reduce their fuel processing capacity.
The first exemptions were granted to Indian refineries, which responded by purchasing millions of barrels of Russian crude oil after months of pressure to halt purchases.
According to data, approximately 30 million barrels of Russian oil are currently available and loaded on ships in the Indian Ocean, the Arabian Sea region, and the Singapore Strait, including amounts in floating storage.
Nevertheless, the recent price increase remains relatively low compared to other price shocks, such as the one in 2022 when Russia invaded Ukraine, which saw prices surge above $100 a barrel.
It's important to put this move into perspective: despite crude oil rising nearly 20% this month, the price is currently only $3.40 above its average for the past four years.
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