Global crude oil prices remained under pressure on Friday, with the market on course for a fourth consecutive weekly decline as improving oil flows through the Strait of Hormuz continued to ease supply concerns that had driven prices sharply higher during the recent Middle East conflict. Although both major benchmarks posted modest gains in early trading, sentiment remained largely bearish as traders assessed the return of Gulf exports.
As at the time of writing, 06:35 p.m. (WAT), Brent crude was trading at $72.12 per barrel, up 0.45%, while West Texas Intermediate (WTI) stood at $68.78 per barrel, gaining 0.13%. The recovery followed profit-taking after weeks of sustained selling pressure that has pushed Brent back to the low-$70 range and WTI below the $70-per-barrel mark.
The sharp correction reflects growing confidence that global crude supplies are normalising following the memorandum of understanding reached between the United States and Iran and the gradual reopening of the Strait of Hormuz. The development has significantly reduced fears of immediate supply disruptions, particularly across Asian markets, where refiners depend heavily on crude shipments from the Gulf.
Fresh market data also indicate that oil exports from the region are gathering pace. Gulf producers, including Iran, are accelerating shipments through the Strait while the current diplomatic window remains open, amid uncertainty over what could happen when negotiations conclude in August. Saudi Arabia alone is estimated to have moved more than 10 million barrels of crude through the waterway in recent days as exports from the Ras Tanura terminal continue to increase.
The improving supply outlook is also becoming evident in the structure of the Brent futures market. Analysts at ING said the front end of the ICE Brent forward curve is coming under increasing pressure as additional crude reaches the market. The futures curve has moved further into contango, a market structure where future delivery contracts trade above prompt-month prices, signalling that concerns over immediate crude availability have eased considerably.
The market's focus has now shifted from geopolitical tensions to supply fundamentals. Whereas traders only weeks ago were pricing in the risk of severe disruptions to Gulf exports, attention is now centred on rising production, improving tanker movements and the possibility of a temporary oversupply if exports continue to accelerate over the coming weeks.
Despite the prevailing bearish sentiment, some market analysts believe the recent sell-off has been excessive, arguing that crude prices have entered oversold territory after surrendering almost all the gains recorded during the conflict. They caution that any deterioration in negotiations between Washington and Tehran or renewed restrictions around the Strait of Hormuz could quickly reverse the current trend.
For Nigeria's downstream petroleum market, sustained weakness in international crude prices could provide further room for domestic fuel price adjustments. With Brent now hovering around $72 per barrel and WTI below $69, refiners and marketers are expected to come under increasing pressure to reflect lower feedstock costs in ex-depot and retail fuel prices, particularly as competition within the domestic market continues to intensify.