Brent Crude Oil Prices Drop Below $72 Per Barrel as Global Supply Concerns Ease

New Delhi: Global crude oil prices extended their decline on Friday as improving oil supplies through the Strait of Hormuz eased fears of major disruptions in the international energy market. The sharp fall pushed Brent crude below $72 per barrel, while West Texas Intermediate (WTI) also recorded significant losses.

The international benchmark, Brent crude, fell by more than 5%, trading near $71.50-$72 per barrel, its lowest level since late February. The benchmark has now declined around 10% over the past week, reflecting growing confidence that global oil supplies will remain stable despite recent geopolitical tensions.

Meanwhile, WTI crude futures dropped nearly 5% to approximately $68.50 per barrel, marking their weakest level in four months.

Strait of Hormuz Reopens, Boosting Global Oil Supply

Market sentiment improved after shipping activity through the Strait of Hormuz accelerated, reducing fears of prolonged supply disruptions. The crucial waterway, which carries a significant portion of the world's crude oil exports, has witnessed a steady return of commercial vessels following progress in diplomatic efforts involving the United States and Iran.

According to market estimates, oil exports from the Persian Gulf have recovered substantially, helping restore confidence among global energy traders.

Major oil-producing nations in the Gulf region, including the United Arab Emirates, Kuwait, Qatar, and Saudi Arabia, have also increased crude shipments to international markets. Saudi Arabia has reportedly resumed loading oil tankers at its key Ras Tanura export terminal, signalling stronger regional supply.

Middle East Tensions Ease After Diplomatic Progress

The recent decline in oil prices follows reports of diplomatic progress between the United States and Iran, which has reduced concerns over potential disruptions to global energy supplies.

Market participants believe easing restrictions on Iranian oil exports and improved access through the Strait of Hormuz have increased the availability of crude in international markets. Reports also suggest Iran has been granted temporary flexibility to resume oil sales, further adding to global supply.

Investor confidence also improved after concerns over fresh military escalation in the Middle East eased, reducing the geopolitical risk premium that had driven oil prices higher earlier this month.

Oil Prices Reverse Earlier Gains

The latest sell-off erased gains recorded during the previous trading session, when crude prices had risen following reports of an incident involving a commercial vessel near the coast of Oman.

With shipping operations returning to normal and supply risks fading, traders shifted focus back to fundamentals, resulting in renewed selling pressure across global oil markets.

Brent and WTI Continue Sharp Monthly Decline

Brent crude has now fallen sharply from its recent multi-month highs reached during the peak of Middle East tensions. Similarly, WTI crude has also erased a significant portion of its conflict-driven gains as global supplies improve.

Analysts say expectations of stronger production and slower demand growth are likely to keep downward pressure on crude prices in the coming months.

IEA Warns of Future Oil Supply Surplus

The International Energy Agency (IEA) has projected that global oil production could outpace demand over the next few years. The agency expects worldwide oil supply to grow significantly by 2027, while demand growth is forecast to remain comparatively modest.

The IEA had earlier announced the release of oil from emergency reserves during the height of the Middle East conflict to help stabilise global energy markets and prevent supply shortages.

(Inputs From Agency)