Oil prices fell on Friday as global energy markets reacted to rising crude supply expectations following the resumption of tanker movements through the Strait of Hormuz after the US-Iran interim peace deal. Brent crude and US West Texas Intermediate both weakened as traders priced in the prospect of additional barrels returning to international markets.
Brent crude futures dropped 54 cents, or 0.68%, to $78.31 a barrel at 0146 GMT. US West Texas Intermediate fell 46 cents, or 0.60%, to $76.14 a barrel. The front-month July contract is due to expire on Monday, while the more actively traded August contract stood at $75.06 a barrel, down 79 cents.
Both benchmarks hit their lowest levels since early March on Thursday after several oil tankers began transiting the Strait of Hormuz. Among them were three Saudi-flagged vessels carrying around 6 million barrels of crude, moving through the strategic shipping route hours after US President Donald Trump signed an agreement with Iran aimed at ending the conflict.
Analysts say the US-Iran deal could ultimately release more than 85 million barrels of crude oil currently stranded in the Middle East Gulf into global supply chains. The agreement also includes provisions for the lifting of US sanctions on Iranian oil exports, a move that could significantly increase global supply.
KCM Chief Market Analyst Tim Waterer said traders were still seeking confirmation that shipping conditions were stabilising. “Traders are still waiting for hard evidence that tanker traffic through the Strait of Hormuz is actually normalising before committing to the next leg lower,” he said. “Until those ships start moving consistently again, scepticism lingers and keeps a lid on the downside.”
Before the war, roughly one-fifth of global oil and liquefied natural gas shipments passed through the Strait of Hormuz, making it one of the world’s most critical energy chokepoints. Analysts suggest trade volumes could return to normal levels in the coming months if the US-Iran agreement holds.
Energy producers across the Middle East have also begun preparing to restore exports. Kuwait Petroleum Corporation said on Thursday that all force majeure notices issued during the conflict had been lifted with immediate effect, signalling a rapid normalisation of supply operations.
In Iraq, Oil Minister Basim Mohammed said the country’s oilfields were ready to resume production, with output expected to return gradually to previous levels as operational conditions stabilise.
Despite the easing of energy tensions, wider geopolitical risks remain. Israel’s continued military campaign against Hezbollah in Lebanon has raised questions over the durability of the US-Iran peace agreement and the long-term stability of regional energy flows.
