Oil set for 2% weekly fall as tanker attacks sustain supply risk

By James Calloway

Brent and WTI were on track for a 2% weekly decline on Friday, even as Brent futures rose 53 cents to $96.35 a barrel and U.S. West Texas Intermediate futures added 20 cents to $88.94 at 0900 GMT.

Brent’s gain was 0.55%, while WTI rose 0.23%. Both benchmarks headed for a second straight weekly loss after plunging 16% and 13%, respectively, in the prior week.

What is pulling crude lower?

The continued U.S. focus on a blockade of Iran and economic pressure eased fears of renewed fighting in the Middle East, although attacks on tankers shipping crude out of the Gulf kept supply risk in the market.

Earlier hopes for a rapprochement in the U.S.-Israeli war with Iran, now in its ninth month, shaped a volatile trading week. On Truth Social, President Donald Trump said a deal with Iran was not necessary to end the war.

Sugandha Sachdeva, founder of New Delhi-based SS WealthStreet, said Trump’s indications that further military escalation might not be necessary raised expectations that Washington could rely more on economic sanctions and restrictions on oil shipments than intensified military operations.

Signs of softening U.S. demand also drove weakness, Sachdeva said, as rising crude and fuel inventories pointed to a relatively subdued consumption outlook. The U.S. Energy Information Administration reported Thursday that inventories rose last week, driven by softer refined-products demand and a jump in oil imports.

In short, traders weighed softer U.S. consumption and a lower expectation of military escalation against continuing shipping risk.

Is the oil market balanced?

Jeff Currie, founder of Real Macro and former global head of commodities research at Goldman Sachs, said: “The market is range bound post midterms. The ability for more hostilities (in Iran) is restricted but a deal is equally elusive. That means the market is roughly balanced, with the ability to trade up limited and the ability to trade down limited.”

Currie’s view fits Friday’s narrow gains and the 2% weekly decline: without a change in the Iran conflict, he sees little room for a sustained move in either direction.

Currie sees a market constrained in both directions, with the Iran conflict providing the clearest route to a break from that balance.

Where does supply risk remain?

The Strait of Hormuz, the key waterway for crude exports from the main Middle East producers, remains exposed to shipping risk.

On Thursday, Iran’s military said four oil tankers had been hit by explosions in the strait after ignoring warnings. Reuters could not immediately verify the Iranian accounts.

On the same day, Yemen’s Iran-backed Houthis said they had attacked a pumping station on Saudi Arabia’s East-West oil pipeline, an oil facility in the Red Sea city of Yanbu and an Aramco building in Riyadh.

The attacks offset earlier hopes for progress in the U.S.-Israeli war with Iran during the week. They also placed tanker routes through Hormuz and Saudi infrastructure around Yanbu and Riyadh under closer scrutiny.

The immediate test is whether any reported attack produces a verified interruption to tanker or pipeline flows rather than another unconfirmed claim.

What could break the balance?

Sachdeva said: “Geopolitical risks remain elevated, and any fresh disruption to oil supplies could quickly reignite upward pressure on prices.”

The immediate watch item is whether the reported tanker explosions and attacks lead to confirmed lost shipments, damaged infrastructure or further attacks. Any such development would test Currie’s balanced-market view and revive the upward pressure Sachdeva described. Without a confirmed supply change, Friday’s narrow gains and weekly losses show a market constrained in both directions.

Traders should watch verified disruptions to Hormuz shipping and Saudi oil infrastructure, because Sachdeva said fresh supply losses could quickly push prices higher.