Oil prices fell Friday as tanker traffic through the Strait of Hormuz picked up, even as the United States and Iran traded fresh strikes and the conflict widened into Egypt. Brent and WTI are still headed for a near-20% monthly gain despite the day's slide, with a sharp draw in U.S. crude inventories and attacks on refineries keeping a floor under prices.
Oil prices slipped on Friday as crude flows out of the Persian Gulf increased, even as the United States and Iran exchanged renewed strikes and the wider regional conflict continued. Brent oil futures expiring in September fell 1.6% to $87.62 a barrel. West Texas Intermediate crude futures dropped 2% to $81.85 a barrel.
Both benchmarks were on track for weekly losses of more than 8% as renewed hopes for peace talks earlier in the week weighed on prices. Still, they were set to surge nearly 20% in July, their biggest gain since March.
Hormuz tanker traffic eases some supply concerns
Ship-tracking data pointed to a modest pickup in tanker movements through the Strait of Hormuz, easing some concern over a prolonged disruption to one of the world's most important oil transit routes. Crossings remain in the single digits, though according to ING analysts: "there are also reports that the shuttling of oil across the strait has resumed" — movement that tracking data would miss if vessels switch off their transponders.
Meanwhile, Saudi Arabia held talks with representatives from 43 countries on forming a maritime coalition to protect shipping around the Red Sea, countering a blockade Iran-backed Houthi militants imposed last week.
Fresh U.S.-Iran strikes and a Suez Canal drone attack support prices
Still, prices appeared supported after fresh U.S. strikes on Iranian military targets prompted retaliatory Iranian missile attacks on U.S. positions and regional allies.
Markets were also rattled after the conflict spread to Egypt, where an unidentified drone struck gas vessels at Egypt's Damietta port near the Suez Canal on Wednesday, triggering fires and stoking concern that another critical energy route could come under threat. The strike added to worries over shipping through the Suez Canal and the nearby SUMED pipeline, key conduits for crude and refined fuel moving from the Middle East to Europe.
At the same time, Houthi militants have intensified threats against Red Sea shipping, while Iran has continued to assert control over traffic through the Strait of Hormuz, pushing shipowners to reassess their routes.
US crude inventories fall to their lowest level since 2018
Capping losses further, attacks on refineries across the Middle East and Russia have tightened supplies of gasoline, diesel and jet fuel, keeping refining margins near record highs even as crude remains below its historic peaks.
U.S. crude inventories also posted a much larger-than-expected decline, adding to concern over tightening supply. Data from the U.S. Energy Information Administration showed commercial crude stockpiles fell by 7.2 million barrels to 404.5 million barrels in the week ended July 24.
The draw left U.S. commercial crude stocks at their lowest level since 2018, adding to fears that an expanding Middle East conflict could tighten global supply further.
Source: Investing.com
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