By: Economy Middle east

Oil prices fell for the first time in six days after reports that the U.S. government was considering possible intervention in the futures market to curb rising prices. Washington has also granted waivers to Indian refiners to purchase Russian crude in an effort to ease supply constraints stemming from the Middle East war.

As of 5:31 GMT, Brent crude futures dropped 85 cents or 1 percent to $84.56 per barrel, while West Texas Intermediate fell $1.01 or 1.25 percent to $80.

Strait of Hormuz closure drives oil prices 18 percent higher

The United States has taken steps to ease the surge in oil prices after it launched a military conflict, in cooperation with Israel, with Iran on February 28.

Oil prices have risen sharply this week as concerns centered on the Strait of Hormuz, a narrow waterway between Iran and Oman that serves as the world’s most vital oil transit route. Around 20 percent of global oil supply moves through the strait each day, making it a critical chokepoint for international energy trade. Any disruption to shipments through the passage could significantly tighten global supplies and drive prices sharply higher.

The fighting has halted tanker movements through the Strait, a route that typically carries about one-fifth of the world’s daily oil supply, while also shutting refineries, curbing oil output and forcing liquefied natural gas plants in the key Middle East energy-producing region to close.

“WTI Crude Oil finished at $78.87 (+3.63 percent), having hit a 20-month high of $82.16 earlier in the session, before trimming over $3.00 of its gains. The rally to new highs was fuelled by renewed fears of extended supply disruptions through the Strait of Hormuz, alongside reports of crude tankers being targeted in the region and countries in Asia curtailing energy exports,” said Tony Sycamore, Market Analyst, IG.

In the four trading sessions since the war began, Brent crude has climbed 18 percent, while West Texas Intermediate has surged 21 percent.

“While panic around surging oil prices appears to be spreading beyond market circles, it’s important to put this move into perspective: despite crude’s almost 20 percent surge this month, the price is currently just $3.40 above its average over the last four years (the 200-week moving average stands at $75.68). Crucially, it remains well below the $100 level it spent the better part of five months trading above in mid-2022 after the Russian invasion of Ukraine,” Sycamore added.

U.S. grants waivers to purchase sanctioned Russian oil

To ease physical supply constraints, which have led refineries, particularly in Asia, to scale back fuel processing, the U.S. Treasury Department has granted waivers allowing companies to purchase sanctioned Russian oil stored on tankers. The first waivers were issued to Indian refiners.

A senior White House official said on Thursday that the U.S. Treasury Department is also expected to announce measures to counter rising energy prices linked to the Iran conflict, including possible action involving the oil futures market. Such a move would represent an unusual effort by Washington to influence energy prices through financial markets rather than physical oil supply.

Analysts noted that the recent rise in oil prices has been relatively modest compared with previous shocks, particularly following Russia’s full-scale invasion of Ukraine in 2022, when crude prices surged above $100 per barrel.

“In summary, if crude holds around $80 in the weeks and months ahead, it will certainly feed into inflation, both headline and, to a lesser extent, underlying. However, with 80 percent of the world’s crude oil still flowing, this rally isn’t yet significant or long enough to send the global economy into recession,” Sycamore added.

This week, Fitch Ratings said the effective closure of the Strait of Hormuz is likely to be temporary, given its vital economic role. This, alongside global oil market oversupply, should limit oil price rises and mitigate any potential disruptions to Iranian oil supply.

“We do not expect significant upside to our December 2025 assumption of an average Brent oil price of $63/bbl for 2026,” said the agency.