Synopsis

Even with Friday's decline, both crude benchmarks were set to end the week higher. Brent was on course to gain about 6%, while WTI was poised to rise nearly 5%.

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Oil prices drifted marginally lower on Friday but remained on track for strong weekly gains as hostilities between the United States and Iran continued to keep markets on edge. While prices eased in early trade, the broader focus remained on escalating geopolitical tensions that have disrupted energy flows and raised concerns over global oil supplies.

Even with Friday's decline, both crude benchmarks were set to end the week higher. Brent was on course to gain about 6%, while WTI was poised to rise nearly 5%.

Crude oil price on July 10

Brent crude futures slipped 0.08%, to $76.24 a barrel. U.S. West Texas Intermediate (WTI) crude fell 4 cents, or 0.06%, to $72.04 a barrel.

The latest weakness in prices came as Iranian armed forces launched attacks on U.S. military infrastructure in Gulf states on Thursday in response to U.S. strikes on Iran's southern coastal and eastern provinces, further straining a three-week-old ceasefire. Separately, Iranian media reported multiple explosions across southern Iran, including in Bushehr, home to one of the country's nuclear power plants.

The renewed exchange of strikes coincided with Iran's burial of its late Supreme Leader Ayatollah Ali Khamenei after a week of mass funeral processions and rallies. Khamenei was killed on the first day of the war on February 28.

Also read: Iran: Gulf on boil again as new US strikes mark fresh escalation; fear rises of a return to war

The conflict has also delayed the full reopening of the Strait of Hormuz, through which around 20% of the world's daily oil and gas supplies moved before the war. The prolonged disruption has kept supply concerns elevated, with the waterway remaining a key focal point for global energy markets.

U.S. President Donald Trump said on Wednesday that he did not believe the war would resume, adding that "anything that happens is going to be over very quickly."

What are experts saying?

"The latest developments have effectively thrown the future of the 60-day negotiation process into doubt," Bjarne Schieldrop, chief commodities analyst at SEB, told Reuters. "In my view, a price closer to $80 a barrel is more consistent with current market fundamentals than $70," he added.

Last month, Saudi Aramco Chief Executive Officer Amin Nasser warned that any prolonged disruption in the Strait of Hormuz could delay the return of stability to global oil markets until 2027. He said an extended disruption could impact nearly 100 million barrels of oil supply every week. Saudi Aramco is the world's largest oil producer.

Read more: Trump wants to leave the Iran war behind. That won't happen soon

Industry experts believe shipping activity through the Strait of Hormuz is unlikely to return to normal anytime soon. They said the process would involve coordinated vessel movements, restarting oil production, repairing damaged infrastructure and reaching agreements on de-mining operations. Several shipowners also remain reluctant to resume operations in both the Strait of Hormuz and the wider Persian Gulf.

Analysts also pointed out that global oil inventories were drawn down during the prolonged disruption to shipping through the strait and would take time to recover. They expect stockpiles to remain under pressure until additional crude supplies from the Gulf begin reaching international markets.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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