Crude oil prices fall up to 2%, head for weekly losses as Hormuz supply fears ease

Global crude oil prices fell sharply on Friday, with Brent crude dropping below $75 a barrel, as concerns over supply disruptions through the Strait of Hormuz eased despite renewed geopolitical tensions in the Middle East.

Brent crude futures were down more than 1% at $74.33 a barrel, while US West Texas Intermediate (WTI) crude fell over 2% to $70.46 a barrel in early trade.

The decline came even after a cargo vessel was struck by an unidentified projectile near Oman on Thursday, prompting the United Nations' shipping agency to suspend its voluntary evacuation programme. According to media reports, two US officials said Iran had fired at the vessel as it attempted to pass through the Strait of Hormuz. Iranian authorities later said they could not guarantee the safety of ships operating outside designated transit routes.


Despite the latest security concerns, oil markets remained focused on improving supply conditions. Both Brent and WTI are on course to post weekly losses of around 7% as tanker traffic through the Strait of Hormuz continued to recover after the ceasefire between Iran and Israel helped ease fears of a prolonged disruption.

Crude shipments through the strategic waterway climbed this week to their highest level since the conflict began in February, although overall vessel movement remains below the pre-conflict average of about 125 ships a day.

For India, softer crude prices could provide relief after the recent spike in energy costs. The Indian basket of crude oil, a weighted average of Brent Dated, Oman and Dubai crude imported by domestic refiners, averaged $86.31 per barrel so far in June after surging during the West Asia conflict. The basket had averaged $106.23 per barrel in May and $114.48 per barrel in April.

Brent crude had briefly climbed to nearly $120 per barrel at the height of the conflict but has since retreated to around $74 per barrel, easing concerns over inflation and fuel import costs.