Oil prices saw a decline on Friday morning following the U.S. government’s issuance of a 30-day license permitting countries to purchase Russian oil and petroleum products currently stranded at sea, alleviating some supply concerns.
By 0123 GMT, Brent futures had fallen by 71 cents, or 0.71%, reaching $99.75 per barrel, while U.S. West Texas Intermediate crude decreased by 88 cents, or 0.92%, to $94.85.
The U.S. Treasury Secretary, Scott Bessent, explained that this license is intended to stabilize global energy markets affected by the ongoing conflict in Iran.
“Issuing the license has eased market concerns, but it won’t resolve the most fundamental issue. The most important thing is the restoration of navigation in the Strait of Hormuz,” commented Yang An, an analyst at Haitong Futures.
The announcement on Russian oil followed the U.S. Energy Department’s decision to release 172 million barrels of oil from the Strategic Petroleum Reserve, aiming to mitigate rising oil prices amid the conflict in Iran. This move was coordinated with the International Energy Agency, which has agreed to release a record 400 million barrels of oil from strategic reserves, including the U.S. contribution.
However, any temporary relief provided by the IEA’s release was overshadowed by a dangerous escalation of risks in the Middle East, noted IG analyst Tony Sycamore in a statement.
Both benchmark oil prices had surged more than 9% on Thursday, reaching their highest levels since August 2022.
Iran’s new supreme leader, Mojtaba Khamenei, stated that Iran would continue its resistance and maintain the closure of the Strait of Hormuz as leverage against the United States and Israel.
In related developments, two fuel tankers in Iraqi waters were reportedly targeted by explosive-laden Iranian boats, according to Iraqi security officials. Consequently, an Iraqi official informed state media that the country’s oil ports have completely halted operations.
As a precaution, Oman has relocated all vessels from its main oil export terminal at Mina Al Fahal, located outside the Strait of Hormuz, according to a report by Bloomberg News on Thursday.
Efforts are underway to address the escalating risks. U.S. Treasury Secretary Scott Bessent mentioned in an interview with Sky News that the U.S. Navy, potentially in collaboration with an international coalition, would escort vessels through the Strait of Hormuz when it is feasible from a military standpoint.
In response to the situation, Saudi Arabia is reportedly offering premiums to reroute tankers to the Red Sea, utilizing its East-West pipeline to ensure oil reaches global markets.
Meanwhile, Iran is allowing a limited number of tankers, primarily destined for China, to pass through the Strait of Hormuz daily, thereby maintaining its relationship with China and ensuring a flow of cash, according to IG’s Sycamore.
