Oil Prices Ease, US Eases Russian Oil Sanctions

WTI crude futures pared early gains to trade below $95 a barrel, taking a breather after a 5% rally this week. Traders continue to assess the conflict with Iran, with no signs of de-escalation, as well as the effectiveness of the US administration’s efforts to cool energy prices. Washington said it would temporarily allow countries to purchase Russian oil currently stranded at sea in an effort to keep a lid on rising energy costs, expanding a temporary waiver granted last week to India. US Treasury Secretary Scott Bessent also called for an international coalition to escort tankers through the Strait of Hormuz “as soon as it is militarily possible”. Earlier in the week, the IEA announced a historic release of 400 million barrels from strategic reserves, though the measure has done little to ease prices. Air strikes in the Middle East continue to disrupt production, while the Strait of Hormuz remains closed.

WTI crude futures traded around $95 per barrel on Friday after a sharp two-day rally, as Iran’s new Supreme Leader Mojtaba Khamenei pledged to keep the Strait of Hormuz effectively shut. He also warned that Iran may open additional fronts in the conflict if the US and Israel continue their attacks, while US President Donald Trump said preventing Iran from obtaining nuclear weapons and posing a threat to the Middle East is more important to him than the cost of oil. Tankers have been unable to load cargo from the Gulf since the conflict began earlier this month, effectively removing 20% of global trade and forcing GCC members to cut production by 10 million barrels per day as storage capacity filled up. The IEA said the disruption was the largest in oil market history, prompting its members to agree on a 400 million barrel release from strategic stockpiles.

WTI oil futures surged further to test the $97 per barrel mark on Thursday on risks that seaborne oil supply from the Persian Gulf is likely to remain halted for longer. The new Iranian Supreme Leader Mojtaba Khamenei stated that the Strait of Hormuz should stay closed in his first public statement, maintaining Tehran's defiant rhetoric and extending bets on the duration of supply disruptions after multiple tankers near the chokepoint were hit the IRGC overnight. The statement coincided with strikes of increasing intensity between Iran, Israel, and GCC members. Tankers have been unable to take deliveries from the Gulf since the start of the conflict this month, effectively removing 20% of global trade and driving GCC members to cut production by 10 million barrels per day as storage capacity was reached. The IEA stated that the disruption was the largest in the oil market in history, driving its members to agree on a 400 million barrel release of strategic stockpiles.