Oil Prices Post Sharpest Weekly Decline in Over a Year Amid Easing Geopolitical Tensions

Global oil prices recorded their steepest weekly drop since March 2023 on Friday, as concerns over potential supply disruptions from the recent Iran-Israel conflict faded, stripping away the geopolitical risk premium that had driven prices higher earlier in the week.

Brent crude futures rose slightly by 35 cents, or 0.52%, to $68.08 per barrel by 7:29 a.m. Saudi time, while US West Texas Intermediate (WTI) crude gained 40 cents, or 0.61%, to $65.64. Despite the modest uptick, both benchmarks were on track for a weekly loss of about 12%, the largest decline in more than a year.

Oil prices had surged to a five-month high at the start of the week after the United States launched airstrikes on Iranian nuclear facilities over the weekend. However, the market quickly reversed course on Tuesday when US President Donald Trump announced a ceasefire between Israel and Iran, leading to a sharp sell-off.

Analysts said the absence of significant supply disruptions has prompted traders to reassess the actual impact of the conflict on oil markets. “Absent the threat of significant supply disruption, we still view oil as fundamentally oversupplied,” analysts at Macquarie said in a note, estimating a surplus of approximately 2.1 million barrels per day (bpd) in 2025.

The firm adjusted its forecast for WTI crude to average $67 per barrel this year and $60 in 2026, each up by $2 to account for residual geopolitical risk.

Midweek price support came from new US government data showing a decline in crude oil and fuel inventories, alongside rising refining activity and consumer demand. “The market is starting to digest the fact that crude oil inventories are very tight all of a sudden,” said Phil Flynn, senior analyst at the Price Futures Group.

Market sentiment was also buoyed by a report in the Wall Street Journal suggesting that President Trump may nominate the next Federal Reserve chair earlier than expected. The prospect of renewed interest rate cuts could support economic activity and boost oil demand.

Still, with oil prices back to pre-conflict levels and supply concerns diminished, market watchers are keeping a close eye on further developments in the Middle East and upcoming data from OPEC and the US Energy Information Administration to gauge future trends.