Oil Prices Ease as Hormuz Flows Counterbalance Middle East Tensions
Oil prices fell on Friday as increased crude flows through key maritime chokepoints helped ease supply concerns, despite rising tensions in the Middle East.
The Strait of Hormuz, a crucial waterway that usually carries about a fifth of global shipments of crude oil and liquefied natural gas, has been largely blockaded since the US-Israel war on Iran launched on February 28. However, tanker traffic has continued through the strait, albeit with higher security risks.
As a result, freight costs and insurance premiums have risen, embedding a significant geopolitical risk premium in oil prices, according to Priyanka Sachdeva, analyst at Phillip Nova.
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. On a monthly basis, both benchmarks were set to rise about 20%.
Saudi Arabia has sought to lead a coalition to boost defence cooperation in the Bab El-Mandeb Strait, the Red Sea, and the Gulf of Aden, all chokepoints for energy supplies. The Saudi defence ministry said 14 nations, including Djibouti, Egypt, Pakistan, Sudan, and Turkiye, were in support of the multinational maritime defence coalition.