Global oil prices retreated in early trading on Friday as reports of improving tanker movements through the Strait of Hormuz tempered fears of an immediate supply shock, although crude benchmarks remained on course for their strongest monthly performance in weeks amid persistent geopolitical tensions in the Middle East.
As at the time of writing 06:17 am (WAT), Brent crude traded at $87.33 per barrel, down 1.91 per cent, while the US West Texas Intermediate (WTI) benchmark fell 2.19 per cent to $81.76 per barrel, reflecting cautious market sentiment despite continuing military exchanges involving the United States and Iran.
Oil prices have softened over the past two trading sessions as more tankers resumed transiting the Strait of Hormuz, easing immediate concerns over severe supply disruptions. Nevertheless, both Brent and WTI remain on track to post monthly gains of almost 20 per cent, underlining the extent to which the prolonged Middle East conflict has reshaped global energy markets.
Market participants said signs of improving crude exports from the Gulf weighed on prices, with investors increasingly pricing in the possibility that oil supplies could normalise if shipping routes continue to reopen.
"There is this sense that there is a lot of supply waiting to hit the market once all of this is resolved, and that is a weight against any kind of dramatic price rise," Again Capital partner John Kilduff told Reuters.
Although tanker movements have increased, vessel traffic through the Strait of Hormuz remains well below pre-conflict levels following the outbreak of hostilities between the United States, Israel and Iran. Analysts noted that even modest improvements in shipping activity have been sufficient to trigger profit-taking across oil futures markets.
ING commodity strategists said some crude transfers across the strategic waterway had resumed through untraceable shuttle operations, while US Energy Secretary Chris Wright indicated that about 13 million barrels of crude oil per day were still leaving the Persian Gulf despite the security challenges.
However, analysts warned that significant upside risks remain. The continued depletion of the United States Strategic Petroleum Reserve could tighten global supply further, with the Department of Energy signalling that emergency releases cannot continue indefinitely. Previous SPR drawdowns have helped cushion crude prices, but markets expect stronger upward pressure once those releases end.
Meanwhile, Saudi Arabia announced efforts to establish a multinational security coalition to strengthen maritime protection around the Bab el-Mandeb Strait and the Gulf of Aden. According to Riyadh, 14 countries, including Turkey, Pakistan, Egypt, Sudan and Djibouti, have expressed support for the initiative as regional powers seek to safeguard one of the world's most critical energy shipping corridors.
Despite the recent pullback, analysts said oil markets are likely to remain highly volatile as traders balance improving shipping conditions against continuing military escalation across the Middle East, where any disruption to crude exports could rapidly reverse the current decline in prices.