KEY POINTS

• Brent crude fell 0.29 per cent to $95.54 a barrel, while US WTI dropped 0.63 per cent to $88.18.
• Both benchmarks were on course for a 2.9 per cent weekly decline, following sharp losses in the previous week.
• The continued US blockade of Iran has eased concerns about further military escalation, weighing on oil prices.
• Rising US crude and fuel inventories have added pressure, pointing to weaker demand.
• Attacks on oil tankers and energy infrastructure in the Gulf continue to threaten supply security.

MAIN STORY

Global oil prices fell on Friday, heading for a second consecutive weekly decline as easing expectations of further military escalation between the United States and Iran and signs of weaker US demand outweighed concerns over threats to Middle Eastern oil shipments.

Brent crude futures declined by 28 cents, or 0.29 per cent, to $95.54 a barrel, while US West Texas Intermediate (WTI) fell by 56 cents, or 0.63 per cent, to $88.18 at 05:27 GMT.

The declines reversed gains recorded in the previous two sessions, extending a volatile week in which diplomatic signals and military attacks across the region repeatedly shifted market sentiment.

US President Donald Trump said on Truth Social that reaching a deal with Iran was not necessary to end the war.

Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet, said Trump’s comments had raised expectations that Washington could rely more on economic sanctions and restrictions on oil shipments rather than expanding military action.

Both oil benchmarks were heading for weekly losses of about 2.9 per cent. Brent had fallen by 16 per cent in the previous week, while WTI declined by 13 per cent.

Weak US demand adds pressure

Data from the US Energy Information Administration (EIA) also weighed on prices after it reported increases in crude oil and fuel inventories for the previous week.

The rise was driven by weaker demand for refined products and increased oil imports, suggesting that consumption in the world’s largest oil-consuming economy remained subdued.

However, concerns over the security of shipments through the Strait of Hormuz continued to support prices.

Iran’s military said on Thursday that four oil tankers were hit by explosions in the strait after ignoring warnings.

Houthi militias also claimed attacks on a pumping station along Saudi Arabia’s East-West oil pipeline, an oil facility in Yanbu and an Aramco building in Riyadh.

Sachdeva warned that further disruption to supplies could reverse the current price decline.

THE ISSUES

Oil prices are influenced by two major forces: how much crude is available for the market and how much buyers are willing to consume.

When traders expect military escalation to disrupt production or exports, they often anticipate tighter supply and higher prices. When those fears ease, some of the additional price pressure can disappear.

The US blockade of Iran has changed market expectations because investors are weighing the possibility that Washington may maintain economic and shipping restrictions without expanding military operations. This has reduced some fears of a wider conflict, although it has not removed the threat to oil shipments.

The Strait of Hormuz remains particularly important because it is a major passage for crude exports from Middle Eastern producers. Attacks on vessels or restrictions on movement through the waterway could disrupt supplies and push prices higher, even when demand is weak.

At the same time, rising US crude and fuel inventories suggest that buyers are not absorbing available supplies as quickly. This weakens the immediate case for higher prices.

For Nigeria, the direction of international oil prices matters because crude exports are an important source of foreign exchange and government revenue. A sustained decline could put pressure on expected export earnings, while renewed supply disruptions could lift prices.

However, higher global oil prices do not automatically translate into higher earnings for Nigeria. Actual revenue also depends on production levels, export volumes and the country’s ability to deliver crude to buyers.

WHAT’S BEING SAID

“Geopolitical risks remain elevated, and any fresh disruption to oil supplies could quickly reignite upward pressure on prices.” – Sugandha Sachdeva, Founder, SS WealthStreet.

WHAT’S NEXT

Traders will continue to monitor developments involving the US and Iran, the security of oil shipments through the Strait of Hormuz and attacks on energy infrastructure across the Middle East.

US inventory and demand data will also remain important in determining whether the current weakness in oil prices continues.

BOTTOM LINE

Oil prices are falling because easing expectations of military escalation and weaker US demand are outweighing immediate supply concerns.

But the decline remains vulnerable to renewed attacks or disruptions along major export routes. The market is therefore balancing weaker consumption against the risk that geopolitical tensions could quickly tighten global oil supplies.