Crude oil prices fell by about 2% on Friday, heading toward sharp weekly losses. The drop comes as shipping routes in the Middle East quickly return to normal, easing fears over recent tensions near Oman.
Global benchmark Brent crude fell $1.52 (2.03%) to $73.73 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.47 (2.04%) to $70.45 a barrel. Both benchmarks hit their lowest levels since late February, erasing the price spikes caused by recent conflicts in the region.
The main reason for the drop is a major breakthrough in shipping through the Strait of Hormuz. Following recent peace agreements between Washington and Tehran, ship-tracking data monitored by Reuters shows that oil tankers are moving through the strait at a much faster pace.
U.S. Energy Secretary Chris Wright confirmed that outbound shipping is nearly back to normal capacity, noting that at least 20 million barrels of crude left the area within a single 24-hour window. The United Nations shipping agency has also been clearing underwater mines to make the lanes safe, bringing a large wave of fresh oil supply back to the market.
“Most of the current increase in flows from the Persian Gulf is outbound, ships exiting the Strait,” observed UBS analyst Giovanni Staunovo in a statement reported by Reuters. “However, a sustained recovery will depend on maritime confidence and insurance premiums normalizing fully.”
Market Shrugs Off Fresh Projectile Attack Off Oman
The sudden Friday morning selloff followed a 2% price spike on Thursday evening. Buyers panicked after a commercial cargo ship was hit by an unidentified object off the coast of Oman, causing the UN International Maritime Organization to briefly pause its voluntary evacuation plans.
U.S. officials claimed that Iranian forces fired on the ship because it drifted outside safe transit lanes. Tehran countered, saying it cannot guarantee the safety of ships that choose to sail outside agreed maritime corridors.
Despite the tension, oil traders quickly looked past the incident on Friday. Analysts noted that major world powers are working to turn a 60-day sanctions waiver into a permanent diplomatic deal. Because of this, minor local incidents are unlikely to stop Iranian and regional oil from returning to the global market.
Asian Demand Softens
The bigger reality facing the oil market is a growing oversupply heading into the second half of 2026. Major Middle Eastern crude benchmarks—including Dubai, Oman, and Abu Dhabi’s Murban—are now selling at deep discounts. This is a massive shift from the high premiums seen during the peak of the shipping crisis.
Banks have lowered their price forecasts as a result. J.P. Morgan recently cut its Brent forecast, predicting prices will average $86 in the third quarter, $80 in the fourth quarter, and hit $78 by the end of the year.
“Refineries in the East have already been well-supplied for the next two months and have little immediate appetite for incremental barrels,” stated June Goh, senior oil market analyst at Sparta Commodities in a report by Reuters, pointing to a cooling spot market.
Impact on Domestic Indian Markets
The cooling global market has hit Indian energy markets directly. On the Multi Commodity Exchange (MCX), crude oil futures for July delivery dropped 0.9% to 6,901 rupees per barrel.
Indian state-run refiners have actively expanded where they buy their oil and are currently sitting on healthy 60-day stockpiles. Analysts expect that if Brent prices stay in the low-$70 range through July, domestic petrol and diesel prices could be cut, helping shield consumers from imported inflation.
-With inputs from Reuters
