Brent futures declined by $1.24, or 1.1%, to $107.41 a barrel as of 0148 GMT, while U.S. West Texas Intermediate (WTI) crude also dropped $1.24, or 1.3%, to $94.90. Even so, Brent was still set to post a weekly gain of over 4%, supported by supply disruptions after Iran’s strikes on oil and gas facilities in the Gulf forced production shutdowns.
To contain the spike in oil prices, U.S. Treasury Secretary Scott Bessent said Washington could consider lifting sanctions on Iranian oil currently stranded on tankers. He also indicated that another release from the U.S. Strategic Petroleum Reserve remains an option.
In a joint statement on Thursday, Britain, France, Germany, Italy, the Netherlands and Japan said they were ready to support efforts to ensure safe passage through the Strait, a route that handles about 20% of global oil and LNG flows.
“We welcome the International Energy Agency decision to authorise a coordinated release of strategic petroleum reserves. We will take other steps to stabilise energy markets, including working with certain producing nations to increase output,” the statement added.
Prices had surged on Thursday after Israel attacked Iran’s South Pars gas field, the country’s largest, which is critical for domestic supply as well as exports to Iraq and Turkey. Iran retaliated by targeting Qatar’s Ras Tanura Industrial Complex, damaging QatarEnergy’s gas infrastructure. The company’s CEO said repairs could take up to five years and result in annual revenue losses of $20 billion.
Saudi Arabia reported that a drone hit its Samref refinery on the Red Sea, a key export hub. The UAE shut a major gas facility due to falling debris from intercepted missiles. In Kuwait, two oil refineries were hit by drones, triggering fires, according to Kuwait Petroleum. Iraq said its power generation was affected after Iran halted gas supplies following the damage at South Pars.
Iran also issued evacuation warnings for energy facilities in Saudi Arabia, the UAE and Qatar, signaling further strikes.
Meanwhile, shipments through the Strait of Hormuz have been disrupted. The route accounts for about 20% of global oil and LNG supply. Production losses in the Middle East are estimated at 7 million to 10 million barrels per day, equivalent to 7% to 10% of global demand.
What are experts saying?
Looking ahead, crude prices could move higher from current levels. According to Kayanat Chainwala of Kotak Securities, oil may rise to $120 per barrel in the near term and potentially touch $150 if the conflict continues beyond a month and geopolitical tensions remain elevated.
Nuvama Institutional Equities echoes the same view. The continued closure of the Strait of Hormuz, which handles around 20 million barrels per day, could push crude prices to the $110–150 per barrel range over the next 4-8 weeks. While the release of strategic reserves may provide some near-term relief, it could also lead to a rebound in demand as inventories are restocked later.
Broader stress is likely to emerge beyond $125 per barrel. Oil marketing companies could see sharp earnings pressure, LPG subsidy burdens may rise significantly, and risks to LNG throughput could increase. In such a scenario, the likelihood of policy intervention also rises. Overall, the first $40 per barrel increase in crude can typically be managed through tax adjustments, but beyond that, the strain on the system becomes more visible, Elara said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)