On Friday, global oil prices significantly dropped after the United States, along with leading European countries and Japan, announced their intention to jointly ensure the safe transit of vessels through the Strait of Hormuz. At the same time, the United States is considering increasing oil supply in the market to stabilize prices.
This is reported by Finway
Price Dynamics and Market Reaction
Brent crude futures fell by $1.36, or 1.3%, to $107.29 per barrel. The American West Texas Intermediate (WTI) lost $1.92, or 2.0%, trading at $94.22 per barrel.
Despite the decline on Friday, Brent approached a nearly 4% increase for the week. This occurred after Iran attacked the oil and gas infrastructure of Gulf countries, leading to a temporary halt in production. Meanwhile, WTI dropped more than 4% over the week, marking its first decline in the last five weeks.
Impact of Geopolitics and Market Outlook
Both benchmark oil grades lost part of the so-called “war premium” on Friday morning when world leaders expressed their readiness to act to reduce tensions and de-escalate the conflict in the Middle East. According to Priyanka Sachdeva, a senior market analyst at Phillip Nova, markets will remain extremely sensitive to developments in the Strait of Hormuz, which is crucial for global oil supplies.
“The damage has already been done, and even if safe passage for tankers is somehow ensured through the Strait of Hormuz, a full restoration of logistics may take a very long time,” Sachdeva said.
She also emphasized that any new direct attack on export infrastructure or tanker routes could trigger a sharp spike in prices. At the same time, prolonged diplomatic efforts may curb price increases and contribute to the gradual disappearance of the “war premium” from the market.
In a joint statement made on Thursday, the United Kingdom, France, Germany, Italy, the Netherlands, and Japan emphasized their “readiness to engage in necessary efforts to ensure safe passage through the strait,” through which approximately 20% of the world’s oil and liquefied natural gas flows.
Additionally, U.S. Treasury Secretary Scott Bessent reported that the American government is considering lifting sanctions on Iranian oil at sea to help stabilize global oil prices.