Oil prices fell sharply on Friday, heading for steep weekly losses as supply concerns eased with more tankers moving safely through the Strait of Hormuz, even as fresh regional tensions kept markets on edge.
Crude oil prices declined by nearly 2% on Friday and were set for significant weekly losses as improved supply flows weighed on the global market. The decline came despite renewed geopolitical uncertainty following a reported attack on a cargo vessel near Oman.
International benchmark Brent crude futures for August were last seen trading 3.2% lower at $72.83 a barrel, extending earlier losses, while U.S. West Texas Intermediate futures for August declined 3.2% to $69.62 per barrel.
Sentiment in the oil market weakened as more vessels successfully exited the Strait of Hormuz, easing earlier fears of supply disruptions. At the same time, Saudi Aramco resumed crude loading at its Ras Tanura terminal in the Gulf after nearly four months, according to shipping data from LSEG.
Two Very Large Crude Carriers (VLCCs), each capable of carrying up to 2 million barrels of oil, were seen loading at the terminal, while another waited nearby.
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Market experts said the decline was driven by rising supply flows and weak demand from key markets.
“There is a general sell-off as the market reacts to increased flows exiting the Strait of Hormuz and China not yet picking up crude demand,” said June Goh, senior oil market analyst at Sparta Commodities.
Despite falling prices, tensions remain high. Oil had earlier risen more than 2% on Thursday after a cargo vessel was struck near Oman, prompting the UN shipping agency to suspend its voluntary evacuation scheme.
US officials told Reuters that Iran fired on the vessel as it attempted to pass through the Strait, while Iranian authorities maintained that security outside designated Hormuz routes cannot be guaranteed.
Brent and WTI crude are both set for weekly losses of around 8%, reflecting continued volatility in global energy markets.
Data shows crude shipments through the Strait of Hormuz reached their highest level this week since the US-Israeli conflict with Iran began in February. However, overall traffic remains far below the pre-conflict average of 125 ships per day.
ING analysts noted that recent increases mainly reflect previously stranded vessels leaving the Persian Gulf rather than sustained recovery in flows.
