Oil Prices Plummet Amid US-Iran Tensions and Inventory Build

Crude oil prices declined on Friday and were headed for their first weekly drop in three weeks, despite ongoing tensions between the US and Iran. The Brent crude futures price slipped by $0.25 (0.3%) to $89.45 a barrel, while West Texas Intermediate (WTI) crude futures fell by $0.22 (0.3%) to $83.31 a barrel.

The decline in oil prices comes despite the fact that both benchmarks were set to post weekly losses for the first time in two weeks. Brent was down 5.3% and WTI lower by 4.3%. The US-Iran tensions have been affecting crude oil prices, but other factors such as a smaller-than-forecast US inventory build and a decline in physical flows are also contributing to the price drop.

Kaynat Chainwala, AVP Commodity Research at Kotak Securities, noted that while diplomatic progress on the Strait of Hormuz has been made, the market remains uncertain. The path forward hinges on whether the new 30-to-60-day corridor timeline holds and physical loadings actually rise.