Oil Prices Fall Sharply as Investors locked in Profits

Global oil prices fell sharply on Friday as investors locked in profits following reports that China is seeking to revive peace talks between the United States and Iran, easing immediate concerns over potential supply disruptions. 

Despite the decline, both benchmark crude contracts posted weekly gains of more than 7%, supported by persistent geopolitical tensions in the Middle East.

Brent crude futures dropped $4.38, or 4.4%, to settle at $96.31 per barrel, retreating after briefly climbing above the $100-per-barrel mark on Thursday for the first time since May.

Meanwhile, U.S. West Texas Intermediate (WTI) crude fell $3.61, or 3.9%, to close at $88.58 per barrel.

Latest Oil Prices:

WTI Crude $89.31 -2.88 -3.12%

Brent Crude $96.78 -3.91 -3.88%

Murban Crude $97.05 -10.12 -9.44%

WTI Midland $91.04 -3.17 -3.36%

Opec Basket $102.8 +8.23 +8.71%

Indian Basket $103.3 +10.14 +10.88%

Natural Gas $2.871 -0.045 -1.54%

Heating Oil $4.181 -0.161 -3.71%

The sharp daily decline came as reports emerged that China has begun efforts to restart stalled negotiations between Washington and Tehran, prompting investors to scale back positions amid hopes that diplomatic progress could reduce the risk of prolonged disruptions to global oil supplies.

However, the broader market remained supported by escalating geopolitical tensions. Oil prices recorded weekly gains of roughly 7%, driven by concerns over military confrontations involving the United States and Iran, reduced tanker traffic through the Strait of Hormuz, and continued attacks by Yemen's Houthi movement on commercial shipping in the Red Sea.

"The energy market remains extremely volatile," said Phil Flynn, Senior Market Analyst at Price Futures Group. "Global inventories are still very tight, and conditions can change rapidly, making it essential to monitor developments closely."

Geopolitical risks continued to underpin the market after U.S. President Donald Trump warned Iran and its Houthi allies of what he described as "severe military consequences" following attacks on two Saudi oil tankers in the Red Sea.

Iran, meanwhile, urged its allies in Yemen to consider closing the Bab el-Mandeb Strait if the United States continues targeting Iranian infrastructure. The Houthis also announced a maritime blockade against Saudi Arabia, prompting Riyadh to redirect part of its crude exports through pipeline networks to reduce reliance on shipping routes passing through the Strait of Hormuz.

Shipping data from maritime analytics firm Kpler showed vessel traffic through the Strait of Hormuz falling to around three ships per day over the past three days. By contrast, traffic through the Bab el-Mandeb Strait increased to 32 vessels on Thursday, up from 26 ships the previous day, suggesting that commercial shipping continues despite heightened security risks.

According to Giovanni Staunovo, commodities analyst at UBS, vessels are still transiting the region's key maritime corridors, indicating that current disruptions "do not amount to the full-scale blockade markets had feared."

Analysts at JPMorgan estimated that every additional month of sustained supply disruption could add $7 to $8 per barrel to Brent crude prices. Should disruptions persist for three months, the bank projects Brent could average approximately $114 per barrel over that period.

The market also found support from fresh supply concerns outside the Middle East. Kazakhstan announced a temporary reduction in oil production after its main Black Sea export terminal was reportedly damaged in suspected Ukrainian attacks. Meanwhile, Russia said it had targeted three Ukrainian ports overnight, including fuel storage and shipping facilities used to support Ukraine's military logistics.