Oil prices were slipping toward a fourth consecutive weekly loss on Friday as the Strait of Hormuz reopened to tanker traffic, improving supply prospects. Brent crude traded in the low $70s per barrel, while WTI slipped below $70, marking a retreat to near pre-war levels. In Asian trading, both benchmarks inched up about 0.5% on profit-taking, with U.S. markets closed for the July 4 holiday.
The tentative reopening of the strategic waterway has eased fears of a prolonged supply disruption. Iran and the U.S. are reportedly negotiating a memorandum that could further stabilize flows. The uptick in vessel movements through the strait has weighed heavily on sentiment after three weeks of sustained selling.
Market participants are now focused on the broader supply-demand balance. The return of Hormuz flows removes a key risk premium that had propped up prices since tensions flared earlier this year. Analysts point to swelling global inventories and tepid demand growth as additional headwinds.
Geopolitical dynamics remain fragile, however. While the current U.S.-Iran talks signal a potential détente, any breakdown could quickly reverse the price slide. The strait carries about a fifth of the world's petroleum, making it a persistent flashpoint for energy security.
Some traders caution that the selloff may be overdone. Supply risks in the Middle East have not fully dissipated, and a rapid recovery in demand could tighten markets again. The path of prices now hinges on whether the diplomatic track holds.