By: Economy Middle East

Oil prices fell on Friday as the prospect of higher global supply strengthened after oil tankers resumed transiting the Strait of Hormuz. 

By 8:28 UAE time, Brent crude futures had declined 38 cents, or 0.48 percent, to $79.47 a barrel, while U.S. West Texas Intermediate crude slipped 23 cents, or 0.30 percent, to $76.37 a barrel, with the July front-month contract due to expire on Monday.

On Thursday, both benchmark contracts reached their lowest levels since early March after several tankers, including three Saudi-flagged vessels carrying a combined 6 million barrels of crude, passed through the waterway just hours after the presidents of Iran and the United States signed an interim agreement aimed at ending the conflict between the two countries.

Supply outlook

Market analysts expect the agreement to release more than 85 million barrels of oil that had been stranded in the Middle East Gulf, while the planned lifting of U.S. sanctions on Iranian oil is also expected to increase global supplies. Before the conflict, nearly one-fifth of the world’s oil and liquefied natural gas passed through the Strait of Hormuz, and analysts believe trade could gradually return to normal if the agreement remains in place.

Producers across the region have already begun restoring exports, with Kuwait Petroleum Corporation lifting all force majeure notices issued during the conflict and Iraq confirming its oilfields are prepared to resume production, with output expected to return gradually to previous levels. However, ongoing Israeli military operations against Hezbollah in Lebanon have raised questions about the durability of the U.S.-Iran agreement. Additional uncertainty emerged after U.S. Vice President JD Vance withdrew from a planned meeting with Iranian negotiators in Switzerland, adding fresh caution to market sentiment.