Crude posted steepest weekly drop in years as ceasefire cools risk premium

Crude futures fell on Friday, sealing their sharpest weekly losses in years as easing tensions between Iran and the US triggered a swift unwind of geopolitical risk premiums.

Brent settled at $95.20 a barrel, down 0.8% on the day and 12.7% on the week, its steepest decline since August 2022. WTI dropped 1.3% to $96.57 a barrel, with a 13.4% weekly loss, the largest since April 2020. The sell-off followed a US–Iran agreement on a two-week ceasefire earlier in the week, brokered by Pakistan.

Physical fundamentals, however, remain strained. Flows through the Strait of Hormuz are still running at below 10% of normal levels, with transit largely limited to Iran-linked vessels. Ongoing restrictions and uncertainty over access continue to cloud supply visibility.

The conflict, which began on 28 February, has damaged more than 60 energy assets across the Gulf, with at least eight facing prolonged outages. Producers have already shut in around 7.5mn bpd in March, with disruptions expected to widen to 9.1mn bpd in April, according to the US EIA.

The scale of supply loss is shifting the global balance towards deficit, reversing earlier expectations of surplus. Even so, producers are preparing for a potential restart, with Asian refiners asked to submit April–May loading plans.

For now, easing tensions are pressuring prices, but unresolved supply constraints continue to limit downside.

Written by: Farid Muzaffar