DOHA – Oil prices declined on Friday after supply expectations improved, following the resumption of tanker movement through the Strait of Hormuz after a peace agreement between the United States and Iran.
By 0328 GMT, Brent crude futures dropped by 43 cents, or 0.54%, to $79.42 per barrel, while US West Texas Intermediate (WTI) crude eased 17 cents, or 0.22%, to $76.43 per barrel. The front-month July contract is set to expire on Monday.
The more actively traded August WTI contract also fell by 30 cents to $75.55 per barrel.
On Thursday, both global benchmarks hit their lowest levels since early March after multiple oil tankers—including three Saudi-flagged vessels carrying around 6 million barrels of crude—transited the strategically vital Strait of Hormuz. The movement came hours after the presidents of the United States and Iran signed an interim agreement aimed at ending hostilities.
Market analysts expect the deal could unlock more than 85 million barrels of crude currently held up in storage across the Middle East Gulf, while the potential lifting of US sanctions on Iranian oil could further increase global supply.
Commenting on market sentiment, KCM chief market analyst Tim Waterer said traders were awaiting clear evidence that shipping activity through the strait was returning to normal before taking further positions on prices.
Before the conflict, nearly one-fifth of global oil and liquefied natural gas shipments passed through the Strait of Hormuz, and analysts suggest trade flows could gradually stabilise in the coming months if the agreement holds.
Several Middle Eastern producers have also begun preparing to restore normal export operations. Kuwait Petroleum Corp announced on Thursday that it had lifted all force majeure declarations issued during the conflict with immediate effect. Iraq’s oil ministry also said production at its oilfields was ready to resume normal levels under Oil Minister Basim Mohammed.
However, geopolitical uncertainties remain. Israel’s ongoing military operations against Hezbollah in Lebanon have raised doubts over the durability of the US-Iran agreement.
Adding to market concerns, US Vice President JD Vance cancelled a scheduled meeting with Iranian negotiators in Switzerland on Friday.
Analyst Vandana Hari of Vanda Insights said the current geopolitical environment still does not provide enough confidence for markets to fully normalise expectations for transit through the Strait of Hormuz.
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