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Crude secured 3% weekly gain as entrenched double-blockade withstands diplomatic paper selloffCrude futures fell Friday on renewed Iranian diplomatic proposals, but an active maritime double-blockade ensured global benchmarks successfully locked in a nearly 3% weekly structural gain. |
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Crude futures retreated in Friday trading as algorithmic flows priced in a renewed diplomatic proposal from Tehran, though aggressive physical supply constraints ensured benchmarks retained significant weekly advances.
The international Brent contract for July delivery fell $2.23 (2.02%) to settle at $108.17 a barrel, while US WTI crude dropped $3.13 (2.98%) to close at $101.94.
Despite the intraday liquidation, both benchmarks secured a 2.95% weekly structural gain, underpinned by Brent's earlier surge to a multi-year peak of $126.41.
The late-week paper selloff was driven exclusively by unverified reports that Iran had submitted a new negotiation framework to Pakistani mediators. However, this preliminary diplomatic posturing remains entirely detached from the physical spot market.
The fundamental maritime chokepoint is firmly intact, defined by a strict double-blockade where Iranian forces maintain the closure of the Strait of Hormuz while the US Navy actively intercepts and halts Iranian crude exports.
This severe logistical paralysis ensures the global downstream complex remains physically starved of baseload Middle Eastern supply. With approximately one-fifth of global oil and liquefied natural gas volumes indefinitely stranded, the underlying spot market remains critically tight, overriding the temporary risk-premium decay generated by near-term diplomatic overtures.
Written by: Aiman Haikal
