Oil slips as higher supplies ease market fears

Global oil prices declined on Friday as increased crude shipments through key maritime routes helped calm supply

Global oil prices declined on Friday as increased crude shipments through key maritime routes helped calm supply concerns, despite continued geopolitical tensions in the Middle East and limited progress in diplomatic talks between the United States and Iran.

Brent crude futures dropped by $1.03, or 1.2%, to trade at $88 per barrel, while US West Texas Intermediate (WTI) crude fell $1.50, or 1.8%, to $82.09 per barrel. Even with the daily decline, both international benchmarks remained on track to post monthly gains of around 20%.

Market analysts said the fall in prices was mainly driven by improving oil flows through the Strait of Hormuz, one of the world’s most important energy shipping routes. The increase in exports helped offset fears that the ongoing regional conflict could lead to major supply disruptions.

The Strait of Hormuz normally carries nearly one-fifth of the world’s crude oil and liquefied natural gas shipments. The route has remained under close watch since tensions escalated following the conflict involving the United States, Israel and Iran.

At the same time, Saudi Arabia is working with regional partners to strengthen maritime security in strategic waterways, including the Bab el-Mandeb Strait, the Red Sea and the Gulf of Aden. These routes play a vital role in global energy transportation.

According to Saudi officials, 14 countries have expressed support for the proposed multinational maritime defence initiative, aimed at improving the safety of commercial shipping in the region.

Meanwhile, the security situation remains uncertain after Yemen’s Houthi movement announced a naval blockade targeting Saudi Arabia, raising fresh concerns over the safety of Red Sea shipping lanes, which serve as an alternative route for oil exports.

Although oil tankers continue to pass through both the Strait of Hormuz and the Red Sea, traders say higher security risks have pushed up shipping costs and insurance premiums. These additional expenses continue to keep a geopolitical risk premium built into global oil prices.