Oil Prices Slide 2% as Hormuz Shipping Improves, Setting Stage for Sharp Weekly Losses

BY COMFORT OGBONNA

Global oil prices fell sharply on Friday, putting both major crude benchmarks on course for their steepest weekly losses in months as concerns over supply disruptions eased. The decline came as more oil tankers successfully exited the strategically important Strait of Hormuz, easing fears that shipping through one of the world’s busiest energy corridors would remain severely disrupted.

Brent crude futures dropped $1.47, or 1.95%, to $73.79 per barrel as of 0421 GMT, while U.S. West Texas Intermediate (WTI) crude fell $1.44, or 2%, to $70.48 per barrel. The latest decline leaves both benchmarks on track to record weekly losses of approximately 8%, reflecting a sharp shift in market sentiment after recent geopolitical tensions pushed prices higher.

One of the key developments weighing on the market was the resumption of crude oil loading at Saudi Aramco’s Ras Tanura export terminal. According to shipping data from LSEG, the Gulf-based facility restarted operations on Friday after nearly four months of inactivity. Two Very Large Crude Carriers (VLCCs), each capable of transporting around 2 million barrels of oil, were seen loading cargoes at the terminal, while another tanker waited offshore to begin loading. The restart signaled that major oil export infrastructure is gradually returning to normal operations despite recent regional instability.

Market analysts said traders have become increasingly confident that oil supplies will continue to reach international markets, reducing the risk premium that had been built into crude prices during recent weeks.

June Goh, a senior oil market analyst at Sparta Commodities, said the broader selloff reflected improved shipping activity through the Strait of Hormuz and weak demand from China, one of the world’s largest crude importers. The combination of improving supply conditions and sluggish demand has placed additional pressure on oil prices.

Despite Friday’s losses, geopolitical risks remain elevated. On Thursday, both Brent and WTI crude had gained more than 2% after a cargo vessel was struck by an unidentified projectile near the coast of Oman. The incident prompted the United Nations’ shipping agency to suspend its voluntary evacuation program in the area, highlighting ongoing security concerns for commercial shipping.

U.S. officials said Iran was responsible for firing on the cargo vessel as it attempted to transit the Strait of Hormuz. Iranian authorities responded by warning that they could not guarantee the safety of ships traveling outside officially designated navigation routes in the waterway. The exchange renewed concerns over the security of one of the world’s most critical maritime trade routes, through which roughly one-fifth of global oil supplies normally pass.

Although shipping activity through the Strait of Hormuz has increased this week to its highest level since the outbreak of the U.S.-Israeli conflict with Iran in February, analysts cautioned that the rebound may not signal a full recovery. Recent data showed that much of the increase came from vessels that had been stranded in the Persian Gulf during the height of the conflict and were only now able to resume their journeys after a ceasefire reopened the route.

However, total vessel traffic remains well below normal levels. Before fighting erupted on February 28, an average of about 125 ships passed through the Strait of Hormuz each day. Current traffic remains only a fraction of that volume, indicating that shipping companies are still exercising caution while monitoring the security situation.

Analysts at ING noted that once the backlog of stranded vessels clears the region, shipping volumes could decline again because the number of new vessels entering the Gulf remains relatively limited. This suggests that while immediate supply concerns have eased, uncertainty surrounding future shipping activity has not completely disappeared.

Elsewhere, fresh concerns emerged over oil production in Venezuela following a series of earthquakes on Thursday. Initial inspections by workers across the country’s extensive oil, gas, and refining network indicated that physical damage was limited. Most of Venezuela’s largest oil-producing regions, refineries, export terminals, and pipeline systems are located far from the areas hardest hit by the earthquakes.

Nevertheless, widespread power outages caused by the seismic activity have created uncertainty about whether the country can maintain its current production level of nearly 1.2 million barrels per day. Energy sources indicated that while infrastructure remains largely intact, prolonged electricity disruptions could affect production, processing, and export operations if power supplies are not restored quickly.

For now, investors appear to be focusing more on improving oil flows through the Middle East than on isolated supply risks elsewhere. As geopolitical tensions ease and shipping activity gradually recovers, traders are increasingly shifting their attention toward global demand trends, particularly in China, where slower-than-expected consumption continues to weigh on the outlook for crude markets.