U.S. crude oil prices declined sharply on Friday, with West Texas Intermediate (WTI) closing near $69.23 a barrel and Brent crude settling below $72, marking lows not seen since the start of the Iran war earlier this year. Both benchmarks have seen declines over the past three weeks amid renewed optimism over tanker traffic through the Strait of Hormuz and expectations of greater Persian Gulf oil exports returning to the global market.

The drop in prices reflected growing indications of an oversupplied market, as many Middle Eastern oil supplies, previously disrupted during the conflict, have begun rebounding. Analysts pointed to widening contango in Brent futures—a market condition reflecting surplus supply—as evidence of this trend. Vessel traffic through the Strait of Hormuz, a critical corridor for global oil shipments, has increased despite recent security incidents.

Earlier this week, an attack targeting the Singaporean cargo ship Ever Lovely near Oman by an unknown party raised concerns about the strait’s safety. Iran condemned vessels not using its authorized transit routes, threatening action against what it terms "violators." Following this incident, the International Maritime Organization announced a temporary pause to its program evacuating ships from the Persian Gulf. Nonetheless, maritime experts noted that shipping activity continued, albeit with some adjustments to established routes due to reported mine threats in central lanes. Two main exit paths have since emerged: one close to Iran’s coast and another alongside Oman, with the latter reportedly under U.S. protection.

Further complexities in the region include potential transit fees that Oman may impose on ships, and ongoing logistical challenges faced by Persian Gulf producers. Saudi Arabia resumed loading tankers at its Ras Tanura terminal, contributing to an overall export recovery currently estimated at about 75% of pre-war levels. The United Arab Emirates, Kuwait, and Qatar are also increasing output. However, Iraq has temporarily halted production at a major field due to tanker shortages, while concurrently seeking a higher OPEC production quota to offset wartime losses. Although Iraq has hinted at the possibility of leaving OPEC, its oil ministry later clarified that no official proposal or position to exit has been made.

Market participants remain focused on the evolving situation in the Strait of Hormuz, as security concerns persist alongside efforts to restore normal oil flows. While recent geopolitical tensions have injected uncertainty, traders expressed cautious optimism that oil shipments will continue moving through the narrow waterway, alleviating fears that supply disruptions will intensify further. Meanwhile, lower crude prices have contributed to a decline in U.S. gasoline prices, which fell to an average of $3.90 per gallon, down 13% over the past month.