On Friday, oil prices fell, with Brent crude down 3.58% to $103.78 per barrel and West Texas Intermediate (WTI) down 2.17% to $99.23 per barrel. Despite this drop, both benchmarks are set to finish the week with substantial gains of approximately 8.4% for Brent and 9.2% for WTI, marking the first time Brent has surpassed $100 since mid-May.
The decline interrupts a strong upward trend, with Brent experiencing five consecutive days of gains and WTI eight days. The market is reacting to heightened geopolitical tensions, particularly regarding the ongoing conflict in Iran and its potential implications for oil supply.
Analysts, including Deutsche Bank's Jim Reid, emphasize that fears surrounding the safety of shipping routes and Saudi oil exports are influencing prices. Tamas Varga from PVM Oil Associates raised concerns about whether the current supply deficit is a temporary issue or a more permanent shift.
He noted that while further price increases are possible, the demand for oil may decrease as prices rise, especially with the growing adoption of renewable energy sources. Varga suggested that the gap between oil supply and demand will eventually narrow, either through increased supply or reduced demand, but cautioned that any price strength may not be sustainable beyond 2026