Oil prices eased in Asian trading on Friday after Washington relaxed certain restrictions on Russian crude purchases, a decision designed to blunt supply shocks linked to the conflict between the U.S., Israel and Iran.
By 21:09 ET (01:09 GMT), Brent futures for May had fallen 0.9% to $99.67 a barrel, while West Texas Intermediate for the same month retreated 0.8% to $93.62 a barrel. Despite the declines, both contracts remained on track for sizeable weekly gains.
The U.S. Treasury late on Thursday issued a 30-day waiver permitting countries to purchase Russian oil that had already been loaded on tankers and placed to sea before March 12. Treasury Secretary Scott Bessent said the temporary measure aimed to help steady energy markets amid supply disruptions arising from the Iran conflict.
Earlier in the week, Washington had granted other limited waivers that allowed some purchases of Russian crude, including permission for India, the world's third-largest oil importer, to receive shipments from Moscow.
The waiver came as tensions linked to the Iran conflict persisted. Iran's new Supreme Leader, Mojtaba Khamenei, declared that Tehran would continue to block the Strait of Hormuz - a strategic oil chokepoint - using the closure as leverage against the U.S. and Israel. That comment followed a period of intensified strikes and counterstrikes: Israel and the U.S. have mounted attacks on Iran, while Tehran has responded with waves of missile and drone strikes, including strikes that have targeted oil infrastructure in several neighboring countries.
Markets have been watching for policy responses aimed at cushioning supply losses. The U.S. indicated plans to release considerable volumes from its strategic petroleum reserve to offset disruptions. Separately, reports earlier in the week pointed to International Energy Agency planning a record release of emergency supplies in excess of 400 million barrels to mitigate the conflict’s impact.
Price momentum has been strong: Brent and WTI futures were poised to add between 7% and 9% on the week, after crude surged nearly 30% in the prior week. The conflict entered its fourteenth consecutive day on Friday, and the combination of strikes on facilities and Tehran’s vow to close the Strait of Hormuz intensified concerns about more structural supply losses.
Analysts at ANZ captured the market mood, writing: "The conflict has now moved beyond a short-lived geopolitical shock and into a phase where supply losses are increasingly structural rather than transient." They added that price volatility is likely to remain elevated, with the skew increasingly to the upside, and that a longer duration of disruption would require higher prices to rebalance markets.
Market participants remain cautious about a prolonged run-up in energy prices, mindful that sustained higher oil costs could boost inflation and prompt a tighter stance from major central banks. For now, U.S. policy steps such as waivers for Russian cargoes and releases from strategic reserves are being used to try to temper near-term supply shortages, even as geopolitical risk keeps upward pressure on prices.
Key points
- U.S. Treasury issued a 30-day waiver allowing purchase of Russian crude already at sea prior to March 12; move intended to stabilize energy markets.
- Brent fell to $99.67 and WTI to $93.62 in Asian trade, but both were set for weekly gains of roughly 7% to 9% after a near 30% jump the prior week.
- Iran’s Supreme Leader Mojtaba Khamenei said Tehran would continue to block the Strait of Hormuz, escalating concerns about sustained supply disruptions.
Risks and uncertainties
- Potential for prolonged disruption to oil flows if the Strait of Hormuz remains blocked - this affects global energy supply and markets.
- Continued retaliatory strikes and attacks on oil infrastructure could lead to structural supply losses, increasing price volatility and inflationary pressures.