Market Overview

On Friday, oil prices dropped nearly 2%, with Brent crude futures for August delivery falling 1.4% to $74.19 per barrel and West Texas Intermediate (WTI) futures slipping 1.6% to $70.77 per barrel. This price movement placed both benchmarks on track for roughly a 7% loss for the week, constituting a third consecutive weekly decline.

Supply‑Side Dynamics

The downward pressure was driven by easing supply‑risk concerns in the Middle East. Traffic through the Strait of Hormuz improved, reaching its highest level since the conflict began earlier this year, as previously stranded vessels resumed movement from the Persian Gulf. At the same time, optimism surrounding a preliminary U.S.–Iran peace agreement helped restore confidence in stable oil flows.

Recent Geopolitical Event

Earlier in the session, a projectile struck a cargo vessel transiting near the Strait of Hormuz, reviving fears over the security of this critical chokepoint. The United Nations International Maritime Organization (IMO) subsequently suspended its efforts to facilitate safe passage for vessels and crews in the region. U.S. officials later asserted that Iran had fired on the ship, raising questions about the durability of the nascent peace accord that had previously helped reopen the waterway after months of disruption.

Analyst Commentary

ING analysts noted that while the increase in shipments through the strait reflects the release of previously stranded cargo, the market momentum remains broadly downward. They cautioned that once the backlog of vessels clears, a pullback in flows could occur, potentially exerting further downward pressure on prices.

Historical Context

Oil prices have erased most of the gains made since the start of the Iran conflict, after having surged above $120 per barrel at the height of the crisis. Earlier in the month, Brent had briefly traded above $90 per barrel before retreating to current levels.

Outlook

The market is currently focused on the continued resumption of oil flows through the Strait of Hormuz and the potential for a more comprehensive U.S.–Iran settlement, both of which could influence future price trajectories.