Oil fell 4% as Chinese peace push tempers Middle East conflict rally

Global crude benchmarks fell nearly 4% on Friday as reports of a Chinese diplomatic push to mediate US-Iran peace talks triggered sharp profit-taking, though both contracts still secured robust weekly gains following days of intense geopolitical escalation.

The international Brent contract dropped $3.91 (3.88%) to settle at $96.78 a barrel, retreating below the $100 threshold after breaching it in the previous session, but concluding the week with a net gain of nearly 10%.

US WTI fell $2.88 (3.12%) to finish at $89.31 a barrel, capping an 8.27% weekly advance.

The geopolitical risk premium receded after Beijing launched an initiative to resume stalled negotiations between Washington and Tehran, injecting diplomatic hope into an overbought market. Downward pricing momentum was reinforced by Kpler tracking data revealing that commercial transits through both the Strait of Hormuz and the Bab el-Mandeb strait continued at reduced volumes rather than suffering a total blockade.

Sustained downside was constrained by tight physical inventories and lingering supply threats, as Washington warned of major military retaliation following Houthi strikes on Saudi tankers, while Russian strikes targeted Ukrainian port fuel reserves.

Written by:  Aiman Haikal