Key facts
- Brent crude futures were set for an 8% weekly fall after Israel and Hezbollah agreed to a ceasefire.
- Tanker traffic through the Strait of Hormuz increased following a U.S.-Iran deal.
- Analysts expect over 85 million barrels of oil to be released into global markets.
- Around 20% of global oil and LNG supply transits the Strait of Hormuz.
Oil prices edged higher on Friday but remained on track for a significant weekly decline as a ceasefire between Israel and Hezbollah eased concerns over potential supply disruptions. Brent crude futures were up 0.83% at $80.51 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 1.23% to $77.54 a barrel. Trading volumes were light due to a U.S. federal holiday.
Gulf producers are preparing to increase exports, with at least four tankers carrying crude, oil products, and liquefied petroleum gas entering the Strait of Hormuz on Friday. Analysts anticipate that a deal between the U.S. and Iran could release over 85 million barrels of oil stranded in the Middle East Gulf into global markets, potentially adding further supply. However, the recovery of flows and production through the vital waterway, through which approximately 20% of global oil and LNG supply transits, could take several months.
Analysts from Citi predict oil markets will move into surplus, with prices trending lower over the next six to 12 months. Commerzbank has lowered its Brent forecast to $80 a barrel by year-end from $85. Iraq's Oil Minister stated that the country's oilfields are ready to resume production and output will gradually return to normal.
OPEC's 2026 World Oil Outlook forecasts world demand to rise to 113.3 million barrels per day in 2030 from 105.1 million barrels per day in 2025.