Oil Prices Rebound Amid Ongoing Middle East Tensions

Oil prices declined on Friday due to increased crude flows through key maritime routes, easing some supply concerns. However, ongoing tensions from the US-Iran conflict kept prices on track for a monthly gain of around 20%. Brent crude futures fell by $1.03 or 1.2% to $88 a barrel, while US West Texas Intermediate (WTI) crude dropped by $1.50 or 1.8% to $82.09 a barrel.

Daniel Hynes, an analyst at ING, attributed the decline in oil prices to rising Middle East tensions being offset by improved flows through the Strait of Hormuz. The waterway has been a major focus for energy markets since the US-Israel war on Iran began on February 28.

Despite tanker traffic continuing through the Strait of Hormuz and the Red Sea, higher security risks have pushed up freight costs and insurance premiums, maintaining a geopolitical risk premium in oil prices. Priyanka Sachdeva, an analyst at Phillip Nova, stated that oil prices had eased from recent highs but the broader outlook remains positive.