Oil prices pared back in Asian trading on Friday after a run of five straight sessions of gains, though both benchmark contracts were still headed for a substantial weekly advance as fighting in the Middle East intensified and raised concerns about global supply.
As of 21:53 ET (02:53 GMT), Brent Oil Futures for May delivery were down 1.5% at $84.13 per barrel. West Texas Intermediate crude futures slipped 2% to $79.44 per barrel.
The retreat followed a sharp rally earlier in the week: Brent had jumped nearly 5% in the previous session to reach its highest level since July 2024, while WTI rallied by more than 8%. If the weekly gains hold, both benchmarks would register advances exceeding 17% for the week.
Geopolitical drivers and shipping risks
Traders said some of the price weakness on Friday reflected profit-taking after the rapid ascent in recent sessions. Still, market participants remained on edge as the conflict in the Middle East showed few signs of easing.
The confrontation entered its seventh day on Friday, with hostilities involving the U.S., Israel, and Iran continuing to escalate. The cycle of missile strikes, retaliatory attacks, and disruptions to energy infrastructure across the region has sustained pressure on global energy markets.
Market attention has focused on the Strait of Hormuz, the narrow passage between Iran and Oman that functions as a vital conduit for crude shipments. Roughly 20% of the world’s oil supply transits the Strait of Hormuz each day, making it a critical chokepoint. Any interruption to flows through the strait could materially tighten global supplies and push prices higher.
ING analysts commented on the situation, noting: "The market remains well supported with few signs of de-escalation in the Middle East and a resumption of energy flows in the region." They added: "Clearly, with every day that goes by without flows resuming, the oil market will reprice the amount of supply lost, leaving room for prices to move higher."
Policy moves and market implications
In a move intended to ease supply concerns, the U.S. said it would allow the sale of Russian oil to India for a 30-day period. Analysts cautioned that while this action "might help put some immediate downward pressure on the market, it is not a game-changer. The only way for prices to come down on a sustained basis is a resumption of oil flows through the Strait of Hormuz," according to ING.
Observers warned that the recent price surge could feed into broader inflationary pressures if elevated energy costs persist. Higher oil prices could complicate the policy outlook for central banks, including the U.S. Federal Reserve, by adding to cost pressures and influencing inflation dynamics.
Market outlook
For now, the interplay between continued geopolitical risk in the Middle East and temporary policy steps such as the short-term U.S. approval for Russian shipments to India will determine near-term market direction. Traders and analysts will be watching closely for any signs that flows through key transport corridors like the Strait of Hormuz are returning to normal, as well as for further escalations that could further disrupt regional energy infrastructure.
Given the current mix of sustained conflict and constrained logistics, the oil market remains sensitive to each development in the region, with prices likely to respond quickly to either easing or further escalation.