Crude Oil Prices Reversal: Weekly Decline Amid Ongoing Strait of Hormuz Disruptions

Crude oil prices have ended their winning streak with a weekly decline for the first time in nearly a month. Brent crude futures settled at $89.31 a barrel, while West Texas Intermediate (WTI) fell to $83.40 a barrel on Friday.

The decline is attributed to improving flows through the Strait of Hormuz, which have eased supply concerns. However, prolonged shipping disruptions could push prices higher, according to JPMorgan and Goldman Sachs, who flag upside risks. The banks estimate that every additional month of disruption could add $7 to $8 a barrel to Brent prices.

Goldman Sachs has separately warned that Brent could rise to $120 a barrel if shipping disruptions through the Strait continue. However, under its base case, the bank expects tensions in the Middle East to eventually ease and forecasts Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year.

U.S. monetary policy has become the dominant global catalyst following Fed Chair Kevin Warsh's hawkish remarks at Jackson Hole. Markets will now focus on the August jobs report, due on September 4, as well as the next inflation reading to determine whether expectations of a September rate hike hold or ease.