Oil prices are on track for their largest weekly decline in a month, even as transit through the Strait of Hormuz has picked up. This comes after an attack on a cargo ship raised fresh concerns about safe passage through this crucial waterway.
Brent crude fell below $73 a barrel, while West Texas Intermediate (WTI) hovered around $70 on Friday. Following initial progress toward a long-term ceasefire agreement between the United States and Iran, ships are now freely navigating the Strait of Hormuz, contributing millions of barrels to the global market. Exports from the Persian Gulf are currently at about 75% of pre-war levels, according to Bloomberg calculations.
Additionally, Saudi Arabia has started loading tankers at its key Ras Tanura terminal in the Persian Gulf, signaling ongoing production growth in the region. However, oil prices rose more than 2% on Thursday after the container ship Ever Lovely was struck by an unknown projectile while sailing southeast of Oman.
Escalation of Tension and Market Reaction
Further negotiations between Washington and Tehran are expected to be lengthy, particularly regarding nuclear policy. Oil futures have recently declined sharply and are poised for a third consecutive weekly drop. “The market calmed down overnight,” noted Arne Loman Rasmussen, chief analyst at A/S Global Risk Management. “It seems that the movement through the strait continues.”
The attack has jeopardized the fragile trust of shipowners and crews, although vessels continued to transit the narrow corridor on Friday. Several tankers turned back early Thursday following reports of warnings from the Iranian Navy, while the International Maritime Organization announced it was suspending its evacuation operations in the strait.
Source: Bloomberg