Oil prices slipped on Friday as improving tanker movement through the Strait of Hormuz helped ease near-term concerns over supply disruptions.
Even so, the market remained on track for one of its strongest monthly performances in years, driven by ongoing geopolitical tensions in West Asia.vBrent crude futures fell $1.03, or 1.2 per cent, to $88 a barrel, while US West Texas Intermediate (WTI) crude dropped $1.50, or 1.8 per cent, to $82.09 a barrel.
Despite Friday’s decline, both benchmarks were on track to close July nearly 20 per cent higher, underscoring persistent worries over potential disruptions to major oil transport routes.
Shipping Recovery Eases Immediate Fears
Market analysts said prices pulled back after shipping movement through the Strait of Hormuz showed signs of recovery, easing immediate supply concerns tied to the conflict involving the United States, Israel and Iran.
The Strait of Hormuz remains one of the world’s most critical energy transit routes, carrying around one-fifth of global crude oil and liquefied natural gas shipments. The waterway has been closely watched since the US-Israel conflict with Iran began on February 28, which raised fears of possible disruptions.
Even with the recent improvement in shipping activity, traders remain cautious given the region’s continued instability. Geopolitical risk continues to lend support to crude prices despite Friday’s pullback.
Saudi-Led Coalition to Protect Shipping Routes
Saudi Arabia is leading efforts to build a multinational maritime security coalition to safeguard shipping routes across the Bab el-Mandeb Strait, the Red Sea and the Gulf of Aden all vital corridors for global energy supplies.
Saudi Arabia’s defence ministry said 14 countries, including Egypt, Pakistan, Djibouti, Sudan and Turkey, have backed the proposed initiative.
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The move follows a recent declaration by Iran-backed Houthi militants in Yemen of a naval blockade targeting Saudi Arabia, stoking concerns over oil shipments through the Red Sea an important alternative route to the Strait of Hormuz.
Investors are also tracking diplomatic talks between the United States and Iran, though recent negotiations have shown limited progress toward easing tensions.
Outlook: Volatility Likely to Persist
Analysts expect crude markets to stay volatile in the weeks ahead as traders weigh improving supply conditions against the risk of fresh geopolitical disruptions.
For now, increased traffic through the Strait of Hormuz has helped pull prices down from recent highs. However, ongoing risks to energy supplies continue to support expectations of a substantial monthly gain in crude prices.