Oil prices remained under pressure on Friday, with both Brent and WTI crude futures on track to record significant weekly declines as easing geopolitical tensions in the Middle East improved the outlook for global energy supplies.
Brent crude futures slipped to around US$79 per barrel, while West Texas Intermediate (WTI) traded near US$76 per barrel during Asian market hours. Both benchmarks are set to post losses of approximately 10% for the week, reflecting a sharp reversal from the elevated levels seen during the peak of the recent U.S.-Iran conflict.
Light Crude Oil (NYMEX) (Source: TradingView)
Investor sentiment has improved considerably following reports of an interim peace agreement between the United States and Iran. According to various media sources, the agreement is aimed at reducing hostilities and restoring commercial shipping activity through the Strait of Hormuz, one of the world's most critical energy transport routes.
The Strait of Hormuz handles a substantial portion of global crude oil exports, and concerns over potential disruptions had previously pushed oil prices above US$120 per barrel. With shipping activity gradually resuming and reports indicating that vessels carrying previously stranded crude have begun moving through the region, fears of a prolonged supply shock have eased.
Market participants are also assessing the possibility that additional Iranian oil exports could return to international markets over the coming months. Increased supply expectations have contributed to the removal of much of the geopolitical risk premium that had been built into crude prices during the conflict.
Despite the positive developments, some uncertainty remains. Reports of fresh military activity in the region have raised questions about the durability of the current ceasefire arrangements. Analysts continue to caution that a full normalization of oil flows through the Gulf may take time and could remain vulnerable to geopolitical developments.
Beyond geopolitical factors, broader macroeconomic conditions have also weighed on crude prices. Recent comments from the U.S. Federal Reserve suggesting interest rates may remain higher for longer have strengthened the U.S. dollar, creating additional headwinds for commodity markets, including oil.
For Australian investors, lower oil prices may provide support for sectors sensitive to fuel and transportation costs, while energy producers could face short-term pressure if crude prices continue to retreat. Market participants will be closely monitoring developments in the Middle East, global supply trends, and central bank policy signals for further direction.
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