Oil prices moved lower on Friday morning following a U.S. decision to issue a 30-day licence permitting purchases of Russian crude and petroleum products that have been stranded at sea. By 0123 GMT, Brent futures had fallen 71 cents, or 0.71%, to $99.75 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 88 cents, or 0.92%, at $94.85.
The licence was presented by U.S. Treasury Secretary Scott Bessent as a measure intended to help steady global energy markets that have been unsettled by the war in Iran. Market participants said the step eased some immediate supply concerns, but analysts cautioned that it did not address the more fundamental insecurity affecting trade routes.
Market reaction and analyst views
Yang An, an analyst at Haitong Futures, encapsulated that view, saying: "Issuing the licence has eased market concerns, but it won’t resolve the most fundamental issue. The most important thing is the restoration of navigation in the Strait of Hormuz." The comment underlines the distinction between short-term liquidity relief and the longer-term requirement that shipping lanes be secure for trade to normalise.
The licence follows other U.S. government efforts to blunt upward price pressure. A day before the licence was issued, the U.S. Energy Department announced plans to release 172 million barrels from the Strategic Petroleum Reserve as part of a coordinated action with the International Energy Agency. The IEA agreed to a record release totalling 400 million barrels from strategic stockpiles, of which the U.S. contribution is a component.
Despite the scale of the coordinated releases, market calm proved fragile. IG analyst Tony Sycamore observed that the fleeting relief delivered by the IEA release was rapidly undermined by a sharp re-escalation of risks in the Middle East. Both benchmark crude contracts had jumped more than 9% on Thursday, reaching their highest levels since August 2022 before retreating on Friday.
On-the-ground disruptions and regional developments
Several developments in and around the Gulf region magnified concerns about the reliability of shipping and oil exports. Iran’s new supreme leader, Mojtaba Khamenei, declared that Iran would continue fighting and would maintain closure of the Strait of Hormuz as leverage against the United States and Israel. In Iraqi waters, two fuel tankers were reported struck by explosive-laden boats linked to Iran, according to local security officials.
An Iraqi official told state media that the country’s oil ports have halted operations completely, while reports said Oman had moved all vessels out of its main oil export terminal at Mina Al Fahal, located outside the Strait of Hormuz, as a precautionary step. In parallel, U.S. Treasury Secretary Scott Bessent indicated in an interview that the U.S. Navy - potentially operating with an international coalition - would escort vessels through the Strait of Hormuz when doing so is militarily feasible.
Producers and shippers are also adjusting commercial routes in response to the disruptions. Saudi Arabia has reportedly paid a premium to reroute tankers via the Red Sea and send oil to global markets using its East-West pipeline. Meanwhile, Iran is allowing a highly limited flow of one or two tankers per day, mainly to China, a pattern market analysts say helps keep cash flowing to certain buyers while preserving political alignments.
Outlook
The licence to move Russian cargoes and the drawdown from strategic reserves have temporarily eased some concerns over immediate supply, reflected in lower prices early on Friday. However, the persistence of regional military threats, closed ports, and disrupted navigation means that core risks to oil flows and price stability remain in place until normal maritime transit can be restored.
Key points
- The U.S. issued a 30-day licence to allow purchases of Russian oil and petroleum products stranded at sea, easing near-term supply concerns.
- Brent fell to $99.75 and WTI to $94.85 by 0123 GMT after the announcement; both benchmarks had surged more than 9% the previous day to multi-month highs.
- The U.S. plans to release 172 million barrels from the Strategic Petroleum Reserve as part of a coordinated IEA release of 400 million barrels from strategic stockpiles.
Risks and uncertainties
- Navigation through the Strait of Hormuz remains a critical unresolved factor for market stability - ongoing closures would continue to threaten oil flows and prices.
- Escalating military incidents, including attacks on tankers and the suspension of operations at some oil ports, could further disrupt exports and shipping insurance, affecting global supply chains.
- Commercial route changes, such as pipeline rerouting and premium payments for alternative transit, may mitigate immediate shortages but could raise costs and logistic risks for refiners and buyers.