Oil prices fell by more than 2 percent on Friday as investors looked beyond renewed security tensions in the Gulf and instead focused on the prospect of stable crude supplies, despite fresh concerns over shipping through the Strait of Hormuz and uncertainty surrounding a temporary U.S.-Iran peace agreement.
Brent crude futures for August delivery fell 2.03 percent to US$73.73 a barrel, while U.S. West Texas Intermediate (WTI) crude for August declined 2.11 percent to US$70.40 a barrel.
The decline came despite reports of a fresh attack on commercial shipping near the Strait of Hormuz, one of the world’s most strategically important oil transit routes.
A U.S. official told CNBC that Iran was responsible for an attack on a Singapore-flagged cargo vessel near the coast of Oman on Thursday. The vessel reportedly sustained damage but there were no casualties or environmental pollution, according to the United Kingdom Maritime Trade Operations (UKMTO).
The incident prompted the International Maritime Organization (IMO) to suspend its newly launched evacuation programme for stranded ships in the Gulf while it reassesses security guarantees.
IMO Secretary-General Arsenio Dominguez said the agency had decided to temporarily halt the operation to ensure adequate safety measures remained in place for vessels awaiting evacuation and others operating in the region.
The evacuation initiative, launched earlier this week, was designed to assist hundreds of ships and thousands of seafarers stranded during months of conflict between Iran and the United States by providing designated routes through either Iranian or Omani waters.
Although maritime traffic through the Strait of Hormuz has gradually increased since Washington and Tehran agreed to a 60-day ceasefire and launched negotiations on a permanent settlement, shipping volumes remain below pre-conflict levels.
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Market participants appeared to view the latest security incident as insufficient to threaten global oil supplies in the immediate term, with attention shifting instead to broader supply fundamentals.
Tensions between Tehran and Washington nevertheless remained elevated over the implementation of the memorandum of understanding underpinning the ceasefire.
Iran’s parliament speaker rejected claims by the Trump administration that Iranian assets released under the agreement would be used to purchase American agricultural products.
U.S. officials maintained that any funds made available to Iran would remain subject to American oversight.
“As Vice President JD Vance announced this week, if Iranian assets are released, they will be used to purchase American agricultural products to feed the Iranian people,” a U.S. official said.
Analysts cautioned that major uncertainties surrounding the agreement remain unresolved.
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Scott Nations, president of Nations Indexes, told CNBC that investors may be underestimating the risks associated with the fragile truce.
“There is so much still that is to be questioned about the actual agreement,” he said, adding that Iran retained significant leverage because of its ability to disrupt shipping through the Strait of Hormuz if tensions escalate.
Meanwhile, attention is also turning to developments within the Organization of the Petroleum Exporting Countries (OPEC), which faces renewed questions over its cohesion.
Iraq, OPEC’s second-largest producer following the United Arab Emirates’ departure from the group in May, has reportedly sought a higher production quota and warned that it could reconsider its membership if its demands are not met.
Any further changes to OPEC’s membership or production policy could reshape global supply expectations at a time when traders are balancing geopolitical risks against signs of ample crude availability.
For now, analysts said the market appears to believe that oil exports from the Gulf will continue largely uninterrupted, limiting the impact of renewed regional tensions on prices.
