Brent crude futures settled down 4.34% at $71.99 a barrel on Friday, while U.S. West Texas Intermediate futures dropped 3.74% to close at $69.23 a barrel.
For the week, Brent crude fell nearly 10% and WTI declined roughly 8.5%, marking another sharp losing stretch for global oil benchmarks.
An initial accord to end the U.S.-Israeli war with Iran, which began on February 28, has allowed traffic through the Strait of Hormuz to restart after a prolonged disruption.
The ceasefire agreement established a 60-day negotiating window to address more complex issues, including Iran’s nuclear program, adding uncertainty to the market’s longer-term outlook.
“The speed of this decline has caught plenty off guard as markets price in a much faster return of Middle Eastern barrels than most had anticipated just a fortnight ago,” said IG analyst Tony Sycamore in a note.
Vandana Hari, founder of Singapore-based oil market analysis provider Vanda Insights, cautioned that the hardest part of delivering on the pledges within the memorandum of understanding is still ahead.
“Crude’s slide is entirely sentiment-driven,” Hari told Al Jazeera, adding that markets are “front-running the prospective reopening of the Strait of Hormuz and likely pricing in the best-case scenario for the normalisation of flows.”
Hari warned that “potential hiccups from logistics to renewed geopolitical tensions are not being adequately factored in,” suggesting prices could swing sharply if optimism proves premature.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that “with shipping traffic steadily improving through the Strait of Hormuz, traders are increasingly focused on a growing queue of cargoes waiting to move.”
Giovanni Staunovo, a strategist at Swiss bank UBS, pointed out that most increased flows are outbound, and that a meaningful rise in inbound traffic requires safety assurances and mine clearance to normalize insurance premiums.
President Donald Trump said on Friday that Iran had violated the ceasefire with drone attacks in the Strait of Hormuz, ratcheting up tensions even as diplomats worked through the MOU framework.
A U.S. official also confirmed that Iran was behind an attack on a cargo ship near the coast of Oman, adding another layer of risk to a market already navigating conflicting signals.
Soaring tanker insurance costs and persistent information gaps continue to widen the disconnect between physical oil market risks and relatively calmer futures prices.
U.S. total crude stocks fell to their lowest level since 1984 last week, according to the Energy Information Administration, driven by strong refining demand and government releases from emergency reserves.
