Brent Crude Tops $105 as Middle East Supply Risks Push Weekly Gain
Brent crude oil rose above $105 per barrel on Friday, putting the benchmark on track for a weekly gain as escalating Middle East conflicts threatened physical energy supplies. US Central Command confirmed that a Singapore-flagged container ship sank in the Strait of Hormuz after being hit by an Iranian projectile. The attack pushed oil tanker rates to record highs and created uncertainty around the recovery of physical crude flows. Meanwhile, growing friction between Saudi Arabia and Iran-backed Houthi forces in Yemen added further risks to regional supply.
The supply concerns coincide with a substantial decrease in domestic reserves. US crude oil inventories dropped by 8.6 million barrels last week, marking the largest single-week inventory decline since February. Despite the overall price gain, Brent crude underperformed West Texas Intermediate (WTI) crude during the week, as lower domestic shipping expenses boosted buyer demand for American barrels.
In response to market pressures, the International Energy Agency (IEA) agreed to proceed with releasing the remaining 100 million barrels of oil from a coordinated intervention first launched in March, following requests from US officials. Energy markets will continue watching how effectively the reserve release offsets maritime shipping bottlenecks and ongoing regional instability.
Key points
- Brent crude traded above $105 per barrel on Friday, heading for a weekly gain.
- An Iranian projectile struck a ship in the Strait of Hormuz, driving tanker rates to record highs.
- US crude oil inventories declined by 8.6 million barrels last week, the largest drop since February.
- The IEA agreed to release its remaining 100 million barrels of crude oil intervention reserves.
- Brent underperformed WTI crude due to cheaper shipping costs for American crude barrels.
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Why did Brent crude oil prices rise above $105?
Brent crude rose due to Middle East supply risks, including an Iranian projectile hitting a ship in the Strait of Hormuz and heightened tensions between Saudi Arabia and Houthi forces.
How much did US crude oil inventories drop?
US crude oil inventories dropped by 8.6 million barrels last week, marking the largest weekly decline since February.
What is the IEA doing to address crude oil supply concerns?
The International Energy Agency agreed to release the remaining 100 million barrels from a coordinated intervention launched in March, following lobbying efforts by US officials.