BY COMFORT OGBONNA
Oil prices fell on Friday but remained on track for their strongest weekly gain in months, with both major crude benchmarks trading above $100 a barrel as escalating attacks along key Middle East shipping routes heightened concerns about prolonged disruptions to global supplies.
Brent crude futures fell $1.64, or 1.5%, to $105.99 a barrel by 0643 GMT, while U.S. West Texas Intermediate crude declined $1.28, or 1.3%, to $101.20 a barrel.
Despite the declines, both benchmarks were more than 10% higher for the week, putting them on course for their steepest weekly increase since the week ended July 17. Oil prices had surged more than 6% on Thursday as traders reacted to worsening supply risks across the region.
The Friday decline came after reports that foreign ministers from several Middle Eastern countries were seeking a temporary arrangement with Iran aimed at managing shipping through the Strait of Hormuz. Any agreement that improves the movement of tankers through the strategic waterway could ease some of the supply concerns that have driven prices sharply higher.
The Strait of Hormuz remains a major focus for energy markets because of its importance to global oil shipments. Traffic through the waterway has fallen substantially from levels seen before the conflict, while attacks on tankers and other vessels have intensified.
The situation has also widened beyond the Strait of Hormuz and the immediate conflict zone. Iran-aligned Houthi forces seized control of Yemen’s port of Mocha on Thursday, raising additional concerns about the safety of commercial traffic through the Red Sea.
Attacks on energy facilities in Saudi Arabia have added another layer of uncertainty for oil markets, increasing fears that disruptions could spread across the wider Middle East and affect additional production and transportation infrastructure.
“While meaningful volumes are still moving through the Strait of Hormuz, flows remain well below pre-war levels, underscoring how fragile the situation has become,” ING analysts said in a note.
The disruption has already begun affecting fuel prices in the United States. The national average price of diesel rose above $6 a gallon for the first time on Thursday, according to GasBuddy, as supply disruptions linked to the conflict and attacks on Russian refineries added pressure to fuel markets.
The escalation has also raised questions about how long the oil market can withstand reduced flows without triggering another significant price surge. Traders are closely monitoring developments involving Iran, shipping traffic and attacks on energy infrastructure for signs that supply disruptions could either ease or intensify.
Analysts have warned that the longer the conflict continues and the wider the disruption becomes, the greater the possibility that crude prices could move significantly higher.
“With events spiralling and Iran showing it is willing to stretch this conflict as wide and as long as it can, it is becoming increasingly likely that WTI crude will retest the $119.48 high from early March,” said IG analyst Tony Sycamore.
The outlook for oil prices will also depend heavily on demand from China, the world’s largest crude oil importer. Continued Chinese purchases could provide additional support to prices at a time when global supplies are already under pressure.
A sustained increase in Chinese buying could amplify the impact of supply disruptions by absorbing available crude and leaving less supply available to other markets.
At the same time, the Organization of the Petroleum Exporting Countries has continued to lower its expectations for global oil demand growth. OPEC reduced its forecast for 2026 demand growth to 380,000 barrels per day, marking the fifth consecutive downward revision.
OPEC production also declined in August, falling by about 640,000 barrels per day, according to industry estimates. The combination of lower production and heightened geopolitical risks has added to the uncertainty facing traders.
For now, investors remain focused on whether physical oil flows through major shipping routes can recover or deteriorate further.
“The next leg in oil will depend less on headlines and more on whether physical flows improve or deteriorate further,” said Phillip Nova analyst Priyanka Sachdeva.
“The question now is whether the market can stabilise below $120, or whether another wave of supply disruption pushes crude into a completely new price regime.”
The sharp weekly increase in oil prices has also intensified concerns about inflation, particularly in major economies where higher fuel costs could feed into transportation, manufacturing and household expenses. If crude remains above $100 for an extended period, central banks could face additional pressure as they try to contain inflation while maintaining economic growth.
With shipping disruptions continuing and geopolitical tensions showing little sign of easing, oil markets are likely to remain highly sensitive to developments around the Strait of Hormuz, the Red Sea and major energy-producing countries.
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