Oil prices extended their losses on Friday, with U.S. benchmark West Texas Intermediate (WTI) crude falling below the $70 per barrel threshold as easing concerns over disruptions to Middle East oil supplies reinforced expectations of increased global crude availability.
As of 6:30 p.m. WAT, WTI crude traded at $69.26 per barrel, down $2.66, or 3.70 per cent, while Brent crude fell 4.38 per cent to $71.96 per barrel, shedding $3.30.
The latest decline marks the fourth consecutive day of losses for WTI and places the benchmark below the psychologically important $70 level for the first time since geopolitical tensions surrounding the Strait of Hormuz intensified.
Market sentiment has shifted in recent days as crude shipments through the Strait of Hormuz show signs of recovery, reducing fears of prolonged supply disruptions that had previously driven prices higher.
According to shipping data, more than 16 million barrels of crude moved through the strategic waterway during the Wednesday-Thursday period, while U.S. Energy Secretary Chris Wright said approximately 20 million barrels exited the Strait within a 24-hour period, describing the development as a return to normal operational flows.
The improvement in shipping activity has strengthened expectations that additional crude supplies from the Middle East will return to the market, easing concerns over potential shortages.
Physical oil markets have also reflected the changing outlook. Middle Eastern benchmark crudes Dubai and Murban have moved into contango, a market structure that typically signals expectations of near-term oversupply, while Brent crude is on course to record a weekly decline of about 10 per cent.
Additional supply expectations have also emerged following a temporary U.S. waiver permitting purchases of already-loaded Iranian crude cargoes, while ongoing discussions around Iraq's OPEC production quota have further reinforced expectations of increased regional supply.
The broader market reaction has extended beyond benchmark futures, with differentials for several physical crude grades weakening as traders reassess supply risks that had previously supported higher prices.
Despite the recent sell-off, some market analysts continue to view longer-term supply expectations with caution. Goldman Sachs said it does not expect a sustained surge in Iranian crude production even if the temporary sanctions relief is extended beyond its scheduled expiration.
The latest decline underscores how quickly oil markets have shifted from pricing in geopolitical supply risks to anticipating stronger crude availability, with the recovery of exports through the Strait of Hormuz becoming the dominant driver of price movements.