Oil dips as Indian tanker passes Strait of Hormuz, but prices still on track for weekly gains

Oil prices fell on Friday after an Indian oil tanker passed through the Strait of Hormuz and as the United States moved to ease supply concerns. However, prices remain on track for weekly gains as disruptions linked to the conflict in the Middle East persist.

Brent crude futures for May delivery fell by 92 cents, or 0.9%, to $99.54 per barrel at 12:34 GMT, but are heading for a weekly gain of about 8%. US West Texas Intermediate crude for April delivery dropped $1.64, or 1.7%, to $94.09 per barrel, with prices expected to rise about 4% over the week.

An Indian government official said an Indian-flagged oil tanker left the eastern side of the Strait of Hormuz carrying a cargo of gasoline bound for Africa. However, analysts warned that the passage of some shipments does not mean the sea route has fully reopened.

Tamas Varga, oil analyst at brokerage PVM Oil Associates, said that some oil is passing through the strait but that does not mean it will be fully reopened, adding that the current decline in prices may be temporary.

In an attempt to ease pressure on markets, the United States issued a 30-day license allowing countries to purchase Russian oil and oil products stranded at sea. US Treasury Secretary Scott Bessent said the move aims to stabilize global energy markets affected by the war between the United States, Israel, and Iran.

According to Kirill Dmitriev, the Russian presidential envoy, the decision could involve around 100 million barrels of Russian oil, roughly equivalent to one day of global oil production.

Bjarne Schieldrop, chief commodities analyst at Skandinaviska Enskilda Banken, said Russian oil was already on its way to buyers, but the decision helps reduce some market obstacles. He added that the main concern for markets is the possibility that the war could last longer, especially if oil infrastructure suffers major damage that could lead to a permanent loss of supply.

The announcement regarding Russian oil came one day after the US Department of Energy said Washington would release 172 million barrels from its strategic petroleum reserve in an attempt to curb rising prices. The move was coordinated with the International Energy Agency, which approved the release of a record 400 million barrels from strategic reserves.

However, the temporary calm created by the announcement quickly faded as tensions escalated in the Middle East, according to Tony Sycamore, market analyst at IG Group.

Iran’s new Supreme Leader Ayatollah Mojtaba Khamenei confirmed that Iran will continue fighting and will keep the Strait of Hormuz closed as leverage against the United States and Israel. Iraqi security officials also reported that two fuel tankers in Iraqi waters were attacked by Iranian explosive-laden boats, while Iraqi authorities announced a complete halt to oil port operations.

US President Donald Trump had said that the United States could make significant profits from higher oil prices resulting from the war with Iran, but stressed that preventing Iran from obtaining a nuclear weapon remains the top priority.

Benchmark crude prices surged more than 9% on Thursday, reaching their highest levels since August 2022.

Goldman Sachs expects Brent crude to average more than $100 per barrel in March and $85 in April, as energy markets remain volatile due to the war with Iran, damage to energy infrastructure in the Middle East, and disruptions to navigation in the Strait of Hormuz.

Analysts believe Brent crude has stronger support compared with West Texas Intermediate because Europe is more exposed to energy security risks, while the United States can mitigate those risks thanks to its domestic production, according to Imreel Jamil, analyst at London Stock Exchange Group.

In a sign that disruptions could last longer, sources told Reuters that Iran has deployed around 12 naval mines in the strait, which could complicate reopening the vital shipping route.

In the same context, US Treasury Secretary Scott Bessent said in an interview with Sky News that the US Navy may escort ships through the Strait of Hormuz, possibly as part of an international coalition, when that becomes militarily feasible.