Crude contracted on Friday as Hormuz de-escalation hopes tempered supply fears

Global crude benchmarks contracted on Friday as diplomatic interventions eased fears of a prolonged maritime blockade, though underlying geopolitical vulnerabilities secured substantial net gains for the week.

The international Brent contract shed 29 cents (0.38%) to settle at $76.01 a barrel, while US WTI fell 67 cents (0.93%) to close at $71.41.

Despite the Friday retreat, the complex retained a volatile premium, with Brent advancing approximately 5.50% and WTI gaining nearly 4.00% across the weekly trading cycle.

The immediate price softening was driven by a halt in direct kinetic exchanges between Washington and Tehran, alongside active Qatari mediation aimed at establishing bilateral talks next week. Market risk sentiment improved further following confirmation that the US administration deliberately avoided targeting Iranian energy infrastructure, fostering anticipation that traffic through the Strait of Hormuz—which historically handled 20% of global daily oil and gas supplies—will shift toward normalization.

However, global supply metrics continue to face structural degradation. The International Energy Agency (IEA) downgraded its projections for Russian oil output following systemic Ukrainian drone strikes on refining hubs, which have forced widespread stoppages and collapsed Russian gasoline production to 65% of its seasonal average. Furthermore, the IEA warned that the broader Middle Eastern conflict threatens to entirely upend the previously forecasted global oil surplus for next year.

Written by: Aiman Haikal