Global oil prices eased on Friday as signs of improving tanker traffic through the Strait of Hormuz tempered supply concerns, although crude remained on track to record its strongest monthly performance in nearly two years after weeks of conflict in the Middle East.
- +Oil prices head for 20% monthly surge despite Hormuz recovery
At the time of writing, Brent crude traded at $88 per barrel, down 1.16 percent.
At the time of writing, Brent crude traded at $88 per barrel, down 1.16 percent. Meanwhile, West Texas Intermediate (WTI) fell by 1.34 percent to $82.47 per barrel.
Despite the decline, both benchmarks are set to post gains of nearly 20 percent for July, reflecting the sharp geopolitical risk premium triggered by the conflict between the United States and Iran, which disrupted shipping through the Strait of Hormuz and sent Brent briefly above $100 per barrel earlier this month.
The latest pullback followed reports that more oil tankers had resumed crossing the Strait of Hormuz, easing fears of prolonged supply disruptions through the world’s most important oil transit route.
“There is this sense that there is a lot of supply waiting to hit the market once all of this is resolved, and that is a weight against any kind of dramatic price rise,” John Kilduff, partner at Again Capital, told Reuters.
Although shipping volumes remain well below pre-conflict levels, traders have reacted positively to any signs of improving traffic, suggesting markets are increasingly pricing in the possibility of a gradual normalisation of exports from the Gulf.
Analysts at ING said there were growing indications that ship-to-ship movements of crude through Hormuz had resumed, although much of the activity remained difficult to track because vessels were operating with their transponders switched off.
The analysts also cited comments by US Energy Secretary Chris Wright, who stated that approximately 13 million barrels per day of crude oil are now leaving the Persian Gulf, indicating that export flows are gradually recovering despite ongoing hostilities.
However, analysts cautioned that upside risks to prices remain.
They pointed to the declining level of the U.S. Strategic Petroleum Reserve (SPR), which has helped cushion markets in recent months through emergency releases. With the Department of Energy signalling that further drawdowns will soon end, markets could lose an important source of additional supply if geopolitical tensions persist.
Meanwhile, Saudi Arabia has sought to reassure energy markets by proposing a multinational security coalition to strengthen maritime protection around the Bab el-Mandeb Strait and the Gulf of Aden. These two strategic shipping routes have also come under threat during the conflict.
According to Riyadh, 14 countries, including Turkey, Pakistan, Egypt, Sudan and Djibouti, have expressed support for the initiative aimed at safeguarding regional energy exports.
