Global crude oil prices experienced a significant decline on Friday, with Brent crude futures falling by 2% to $73.75 a barrel in early trade. Similarly, US West Texas Intermediate (WTI) crude also dropped by about 2% to $70.42 a barrel. The decrease in prices comes as worries over supply in the Strait of Hormuz eased, despite new geopolitical tensions arising from an attack on a cargo vessel near Oman.
Both benchmark contracts had previously seen a more than 2% increase after the cargo vessel incident near Oman. Reports indicated that Iran allegedly fired on the vessel as it tried to pass through the Strait of Hormuz. Iranian authorities mentioned that they could not ensure the safety of ships traveling outside designated routes in the Hormuz region. Despite these security concerns, Brent and WTI were on track for weekly losses of nearly 7% as fears of supply disruptions diminished.
Crude oil shipments through the strategic Strait of Hormuz have increased this week to the highest level since the conflict between the US, Israel, and Iran began in February. This rise follows a ceasefire that allowed for the reopening of the route. However, overall vessel traffic remains below the pre-conflict average of approximately 125 ships per day. The Indian basket of crude oil, which includes Brent Dated, Oman, and Dubai crude grades, averaged $86.31 per barrel in June, showing a decrease from previous months.
