Key Moments
- WTI US Oil trades around $75.60, up 0.21% on the day, but still tracks a weekly loss of roughly 10%.
- Crude flows through the Strait of Hormuz are resuming after the United States lifted maritime restrictions on traffic to and from Iranian ports.
- A 60-day memorandum of understanding between Washington and Tehran has prompted investors to scale back the geopolitical risk premium in Oil prices.
WTI Stabilizes After Steep Weekly Slide
West Texas Intermediate (WTI) US Oil is trading near $75.60 on Friday at the time of writing, 0.21% higher on the day. Despite the modest intraday gain, prices remain under notable pressure after a sharp decline this week. The benchmark is heading for a weekly loss of roughly 10% as market participants reassess Middle East supply risks amid rapidly improving conditions in the Strait of Hormuz.
Hormuz Traffic Resumes and Risk Premium Reprices
Improved shipping conditions in the Strait of Hormuz are allowing Crude exports to return to the market, easing earlier fears of a prolonged supply squeeze. Investor sentiment has brightened following the implementation of a 60-day memorandum of understanding between Washington and Tehran, which has prompted a reduction in the geopolitical risk premium embedded in energy prices.
The United States (US) Central Command (CENTCOM) has removed all maritime restrictions on vessels traveling to and from Iranian ports and coastal waters. In parallel, several Crude cargoes that had been stranded in the region have begun departing, bolstering expectations of improved global supply prospects.
Evidence of Normalizing Flows and Producer Response
US Vice President JD Vance stated that 12.5 million barrels of Oil passed through the Strait of Hormuz overnight without any interference from Iran, reinforcing the perception that shipping conditions are returning to normal. At the same time, Kuwait has announced plans to gradually increase production, further supporting the outlook for greater supply availability.
| Indicator | Detail |
|---|---|
| WTI price level | Approximately $75.60 |
| Daily move | Up 0.21% |
| Weekly performance | Heading for a loss of roughly 10% |
| Oil flows reported | 12.5 million barrels passed through the Strait of Hormuz overnight |
| Diplomatic framework | 60-day memorandum of understanding between Washington and Tehran |
Unresolved Risks and Diverging Views on Future Fees
Despite the improvement, some caution persists. According to Rabobank, the agreement has reduced immediate threats to the global economy but left open key issues regarding the longer-term administration of the Strait of Hormuz. The bank highlighted that Iran is considering the introduction of maritime fees once the 60-day period ends, while US President Donald Trump has already voiced opposition to any tolls on vessels using the strategic route.
Deutsche Bank observed that early signs of renewed Oil flows initially pressured Crude prices lower after the agreement was signed, before the market later found some stability. The bank believes that the progressive restart of exports through the Strait of Hormuz is helping to alleviate concerns over global supply disruptions, even as uncertainty around subsequent negotiations still weighs on sentiment.
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