Oil prices edged lower on Friday as signs of steady crude shipments through key Middle East shipping routes eased immediate supply concerns. However, both major benchmarks remained on course for their strongest monthly gain in years, supported by persistent geopolitical tensions.
Brent crude futures fell $1.03, or 1.2 percent, to $88 a barrel by 0215 GMT. US West Texas Intermediate (WTI) crude declined $1.50, or 1.8 percent, to $82.09 a barrel.
Despite the day’s losses, both Brent and WTI were still set to finish July with gains of around 20 percent, reflecting the market’s continued focus on supply risks linked to the conflict in the Middle East.
Analysts said oil prices were being pulled in opposite directions. While tensions in the region continued to support prices, evidence that more oil tankers were successfully moving through vital shipping lanes helped ease fears of an immediate supply disruption.
Daniel Hynes, an analyst at ING, said the recent decline reflected improving crude flows through the Strait of Hormuz, even as tensions across the Middle East remained elevated.
The Strait of Hormuz is one of the world’s most important energy routes, carrying roughly one fifth of global crude oil and liquefied natural gas shipments. It has remained at the centre of market attention since the outbreak of the US-Israel war on Iran on February 28, which raised concerns about possible disruptions to global energy supplies.
Attention has also shifted to other strategic waterways. Saudi Arabia is seeking to strengthen regional security by leading a multinational maritime defence coalition covering the Bab El-Mandeb Strait, the Red Sea and the Gulf of Aden, all of which are critical routes for global oil shipments.
According to the Saudi defence ministry, 14 countries have backed the initiative, including Djibouti, Egypt, Pakistan, Sudan and Turkiye.
Meanwhile, Iran-backed Houthi forces in Yemen last week announced a naval blockade targeting Saudi Arabia, raising fresh concerns over the safety of shipping through the Red Sea, which serves as an alternative route for Saudi oil exports.
Even though tanker traffic has continued through both the Strait of Hormuz and the Red Sea, shipping companies are facing higher security costs. Rising freight charges and insurance premiums have added a geopolitical risk premium to crude prices, helping keep the broader market well supported.
Priyanka Sachdeva, an analyst at Phillip Nova, said the recent decline had done little to change the overall outlook.
“While prices eased from recent highs, the broader trend remains constructive,” she said.
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