Oil prices fall as Strait of Hormuz flows improve despite renewed security concerns

Oil benchmarks on track for third weekly decline

As of 02:10 ET (06:10 GMT) on Friday, August Brent Oil Futures were down 1.4% at $74.19 per barrel, while West Texas Intermediate (WTI) crude futures fell 1.6% to $70.77 per barrel. For the week, both benchmarks were on course to post losses of roughly 7%, extending declines that began after last week’s preliminary U.S.-Iran peace deal.

The recent slide has erased most of the price gains recorded since the onset of the Iran conflict, when oil had surged above $120 a barrel at the peak of the crisis. Brent crude has also retreated sharply from levels above $90 a barrel seen earlier this month, as traders increasingly anticipate that a broader U.S.-Iran settlement could help stabilize regional oil flows.

Strait of Hormuz flows rise amid lingering security risks

Both benchmarks had gained more than 2% in the previous session after a projectile struck a cargo vessel transiting near the Strait of Hormuz, renewing concerns over the security of one of the world’s most important energy chokepoints. Following the incident, the United Nations’ International Maritime Organization suspended efforts aimed at facilitating safe passage for vessels and crews in the region.

U.S. officials later said Iran had fired on the ship, raising questions about the durability of the preliminary peace accord between Washington and Tehran that had helped reopen the waterway after months of disruption. Despite this, sentiment in oil markets turned back to the downside as attention shifted to rising crude flows through the strait.

According to ING analysts, “market momentum still appears to be largely downward,” with the market “largely focused on the resumption of oil flows through the Strait of Hormuz, which continues to increase.” Crude shipments through the strait climbed this week to their highest level since the conflict began earlier this year.

ING analysts cautioned, however, that much of the recent increase reflects previously stranded vessels leaving the Persian Gulf, and suggested that flows could pull back once these vessels have moved out.

FAQ

What are current Brent and WTI prices mentioned?
Answer: As of 02:10 ET (06:10 GMT), August Brent Oil Futures were at $74.19 per barrel and WTI crude futures were at $70.77 per barrel.

How much have oil prices fallen this week?
Answer: Both Brent and WTI were set to post weekly losses of roughly 7%.

What recent event raised security concerns near the Strait of Hormuz?
Answer: A projectile struck a cargo vessel transiting near the Strait of Hormuz, and U.S. officials later said Iran had fired on the ship.