Middle East Tensions Fail to Dent Oil Prices' Monthly Gains
Oil prices took a hit on Friday but still managed to stay on track for a significant monthly gain, despite rising tensions in the Middle East. Brent futures fell $1.03, or 1.2%, to $88 a barrel by 0215 GMT, while US West Texas Intermediate (WTI) crude slipped $1.50, or 1.8%, to $82.09 a barrel.
The drop was attributed to increased oil supplies flowing through the Strait of Hormuz, a key maritime chokepoint that has been a focal point for oil markets. The strait usually carries about a fifth of global shipments of crude oil and liquefied natural gas.
Saudi Arabia is seeking to lead a coalition to boost defence cooperation in the Bab El-Mandeb Strait, the Red Sea, and the Gulf of Aden, all critical energy supply routes. The Saudi defence ministry said 14 nations, including Djibouti, Egypt, Pakistan, Sudan, and Turkiye, were in support of the multinational maritime defence coalition.
Despite the dip, oil prices remain on track for a monthly rise of about 20%. Analysts say the increased security risks have boosted freight costs and insurance premiums, embedding a significant geopolitical risk premium in oil prices.