Oil prices dropped 2% on Friday, capping a brutal week for crude markets, as fading supply fears in the Strait of Hormuz sparked a broad selloff even as fresh hostilities in the region kept traders wary.
Brent crude futures slipped $1.50, or nearly 2%, to $73.76 a barrel in early trading, while U.S. West Texas Intermediate shed $1.49, falling to $70.43 a barrel.
Both benchmark contracts are now tracking losses of approximately 8% for the week, a bruising stretch that underscores how rapidly market sentiment has shifted from anxiety over Persian Gulf access to relief over returning flows.
For weeks, oil traders had been bracing for prolonged disruption to one of the world’s most critical energy chokepoints. The Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes, had been thrown into uncertainty following the outbreak of the U.S.-Israeli conflict with Iran on February 28.
The standoff had effectively strangled tanker traffic and sent prices lurching higher on fears of a sustained supply shock.
But Friday’s price action tells a markedly different story. A steady stream of previously stranded tankers has begun making its way out of the Persian Gulf, calming nerves that had kept a floor under crude prices for much of the past week.
“There is a general selloff as the market reacts to the increased flows exiting the Strait of Hormuz and China not yet picking up crude demand,” said June Goh, senior oil market analyst at Sparta Commodities, identifying the twin forces dragging prices lower: recovering supply and sluggish demand from the world’s largest crude importer.
In perhaps the most consequential development of the day, Saudi Aramco resumed oil loading operations at its Ras Tanura terminal on Friday, ending a nearly four-month halt at one of the world’s largest crude export facilities.
Shipping data from LSEG confirmed that two very large crude carriers were actively loading at the terminal, with a third vessel waiting nearby. Each VLCC is capable of carrying up to 2 million barrels of oil, meaning the resumption at Ras Tanura alone could soon inject several million barrels back into global supply chains.
The restart at the strategically vital Saudi terminal is a powerful signal that Riyadh is moving swiftly to restore export capacity and that the kingdom is betting on continued stability in the waterway, at least for now.
Just a day before Friday’s selloff, markets reacted in the opposite direction, surging more than 2% on Thursday after a cargo vessel was struck by an unknown projectile near Oman. The incident prompted the United Nations’ shipping agency to suspend its voluntary evacuation scheme, rattling an already jittery shipping industry.
Two U.S. officials told Reuters that Iran fired on the vessel as it attempted to transit through the strait. Iranian authorities subsequently warned that the security of vessels passing outside designated Hormuz routes could not be guaranteed, a statement widely interpreted as a veiled threat to commercial shipping.
That the market absorbed Thursday’s attack and still resumed its downward trajectory on Friday speaks to a growing conviction among traders that the immediate supply risk is receding, even if the security environment remains volatile.
Analysts, however, are cautioning against reading too much into the surge in Hormuz traffic. Data released Thursday showed crude shipments through the strait climbed to their highest level since the conflict began in February, following a ceasefire deal that reopened the waterway. But context matters: overall traffic remains a fraction of the pre-conflict daily average of 125 ships passing through.
Crucially, much of the current uptick appears to reflect a one-time clearing of the backlog, rather than a sustained recovery in flows.
“Much of the increase reflects previously stranded vessels leaving the Persian Gulf. Vessel flows into the Gulf remain much more modest. It suggests that once stranded vessels have moved out, we could see a pullback in flows,” analysts at ING wrote in a note to clients on Friday, a warning that the current wave of relief may prove short-lived.
Adding another layer of complexity to an already crowded risk landscape, earthquakes that struck Venezuela on Thursday briefly raised fresh supply concerns.
Preliminary assessments by workers at Venezuela’s oil, gas, and refining infrastructure suggested limited structural damage, with the country’s largest producing regions, key refineries, pipelines, and terminals located well away from the worst-hit areas.
Nevertheless, widespread power outages have cast doubt over whether Venezuela can sustain its pre-earthquake production levels of close to 1.2 million barrels per day, according to sources familiar with the situation. For a nation that has spent years painstakingly rebuilding its battered oil industry, the timing could hardly be worse.
The week’s dramatic swings from geopolitical panic buying to a relief-driven selloff illustrate just how knife-edge the global oil market remains. The ceasefire in the Hormuz region has offered a window, but whether that window holds is far from certain.
Iran’s warnings, the attack on the cargo vessel, and the structural fragility of Venezuela’s energy sector all serve as reminders that the current calm may be more fragile than Friday’s falling prices suggest.
For now, the market is choosing to focus on the oil that is moving, not the threats that could yet stop it.
WHAT YOU SHOULD KNOW
Global oil prices are on track for their worst weekly performance in months, with Brent and WTI both down roughly 8%, as relief over returning tanker flows through the Strait of Hormuz outweighs fresh security concerns.
While Saudi Aramco’s resumption of loadings at Ras Tanura and the clearing of stranded vessels signal improving supply, analysts warn this may be a temporary flush rather than a genuine recovery in traffic.
Iran’s attack on a cargo ship, persistent uncertainty over the strait’s long-term stability, and power outage-driven production risks in Venezuela all serve as stark reminders that the current calm is fragile.
