Global oil prices experienced a decline on Wednesday, with Brent crude futures dropping 2.50% to $100.85 per barrel and US benchmark West Texas Intermediate (WTI) crude falling 3.40% to $92.83. WTI futures have decreased by 4.73% this week, while Brent crude has seen a decline of over 2%. The market volatility is attributed to heightened geopolitical risks in West Asia following the killing of Ali Larijani, a senior Iranian security official.
The Strait of Hormuz, a crucial oil transit route responsible for nearly a fifth of global shipments, remains a focal point of concern. Vessel traffic in the strait is currently impacted by geopolitical tensions rather than regular trade activities. Efforts by US President Donald Trump to secure the passage with allied support have faced obstacles, contributing to uncertainties in supply chain normalization timelines.
Amid escalating military activities in the region, including increased attacks by Iran and US strikes near the strait, oil prices have surged by almost 70% this year. This surge, driven by tensions involving Iran, the US, and Israel, is now reflecting in retail fuel costs, with US diesel prices surpassing $5 per gallon. The recent correction in oil prices follows a more than 3% surge in the previous session.
