Oil prices dropped on Friday morning after the US issued a 30-day license for countries to buy Russian oil and petroleum products currently stranded at sea, easing supply concerns.
Brent futures dropped 71 cents, or 0.71 per cent, to $99.75 a barrel by 0123 GMT, and US West Texas Intermediate (WTI) crude was down 88 cents, or 0.92 per cent, to $94.85.
The license was issued in what Treasury Secretary Scott Bessent said was a step to stabilise global energy markets roiled by the war in Iran.
“Issuing the license has eased market concerns, but it won’t resolve the most fundamental issue. The most important thing is the restoration of navigation in the Strait of Hormuz,” said Yang An, analyst at Haitong Futures.
The announcement on Russian oil came a day after the US Energy Department said the US would release 172 million barrels of oil from the Strategic Petroleum Reserve in an effort to curb skyrocketing oil prices in the wake of the war in Iran.
That plan was coordinated with the International Energy Agency, which has agreed to release a record 400 million barrels of oil from strategic stockpiles, including the US contribution.
Fleeting relief sparked by the IEA release, however, was shattered by a dangerous re-escalation of Middle East risks, IG analyst Tony Sycamore said in a note.
Both benchmark prices surged more than 9 per cent on Thursday and hit their highest levels since August 2022.
Iran’s new supreme leader Mojtaba Khamenei said Iran would fight on and keep the Strait of Hormuz shut as leverage against the United States and Israel.
Two fuel tankers in Iraqi waters were struck by explosive-laden Iranian boats, Iraqi security officials said on Thursday. An Iraqi official told state media that the country’s oil ports have completely stopped operations.
Oman shifted all vessels out of its main oil export terminal at Mina Al Fahal, outside the Strait of Hormuz, in a precautionary move, a Bloomberg News report said on Thursday.
Still, other measures are being taken to try to curb the rising risks.
US Treasury Secretary Scott Bessent told Sky News in an interview that the US Navy, perhaps with an international coalition, would escort vessels through the Strait of Hormuz when it is militarily possible.
Saudi Arabia is reportedly paying a premium to reroute tankers to the Red Sea, using its East-West pipeline to transport oil to global markets.
Meanwhile, Iran is allowing one or two tankers a day through, mainly to China, keeping China on its side and cash flowing, IG’s Sycamore said in his note.
