Oil prices edged lower on Friday as concerns over supply disruptions eased with an increase in tanker traffic through the Strait of Hormuz, although renewed security risks in the region continued to keep markets on edge.
At around 7 am IST, Brent crude was trading at $74.95 per barrel, down 31 cents (0.41%), while US West Texas Intermediate (WTI) crude fell 32 cents (0.44%) to $71.60 per barrel.
The decline followed a sharp rally on Thursday, when oil prices climbed more than 2% after a cargo vessel near Oman was struck by an unidentified projectile. The incident prompted the United Nations’ shipping agency to suspend its voluntary evacuation programme in the area.
According to Reuters, two US officials said Iran fired at the vessel as it attempted to transit the Strait of Hormuz. Iranian authorities, however, warned that they could not guarantee the safety of ships travelling outside designated navigation routes in the strategic waterway.
“With the geopolitical risk premium once again creeping back into prices, markets will be watching intently to see if tanker traffic resumes or if these latest hurdles force producers to tap the brakes on planned production increases,” said IG market analyst Tony Sycamore.
Despite Thursday’s gains, both Brent and WTI crude are on course to register weekly losses of around 7%, reflecting easing fears over immediate supply disruptions.
Data released on Thursday showed that crude shipments through the Strait of Hormuz climbed this week to their highest level since the US-Iran conflict began in February, following the ceasefire that reopened the crucial shipping route.
However, tanker traffic remains well below pre-conflict levels. Before hostilities erupted on February 28, the strait handled approximately 125 ships per day, making it one of the world’s busiest energy transit corridors.
Meanwhile, earthquakes in Venezuela have also raised concerns about global oil supplies. Initial assessments indicated limited damage to the country’s oil and gas infrastructure, with major production fields, refineries, pipelines and export terminals located away from the worst-affected areas.
However, industry sources cautioned that widespread power outages could hamper Venezuela’s ability to sustain crude production at its pre-earthquake level of nearly 1.2 million barrels per day.
Oil prices had surged above $126 per barrel during the height of the US-Iran conflict, driven by fears of supply disruptions through the Strait of Hormuz. Following the ceasefire and the gradual resumption of tanker traffic, crude prices have retreated sharply, falling to their lowest levels in four months and moving closer to pre-conflict levels.
