Oil Falls Weekly Despite Supply Disruptions

Oil prices posted modest gains on Friday but remained firmly on track for their steepest weekly decline since June. The move comes as markets balance easing geopolitical tensions with persistent supply disruptions across the Middle East. Despite weaker futures, physical market conditions continue to point to tight global flows.

Main News Description

Oil markets edged higher on Friday but remained under pressure for what is shaping up to be their steepest weekly decline since June, as persistent disruptions across the Middle East continued to clash with easing macro risk sentiment following a fragile ceasefire.

Brent crude futures rose 0.58% to $96.48 a barrel, while West Texas Intermediate gained 0.66% to $98.52 by 0920 GMT. Despite the intraday recovery, both benchmarks are still down around 11-12% this week, reflecting the sharp repricing that followed a two-week ceasefire brokered by Pakistan between the U.S. and Iran earlier in the week.

The physical market, however, is telling a different story. Flows through the Strait of Hormuz remain below 10% of normal volumes, with ongoing restrictions and warnings to shipping keeping the critical route heavily constrained. Market participants say this divergence between futures and physical supply conditions is widening.

Supply risks were further underscored by reports of 600,000 bpd in lost Saudi production capacity and a 700,000-bpd reduction in East-West pipeline throughput. Roughly 2.4 million bpd of refining capacity across the Gulf has also been taken offline since the conflict began.

Conclusion

While Lebanon’s planned talks in Washington next week briefly tempered gains, traders remain focused on whether the Strait of Hormuz can normalize or remain structurally constrained. The gap between futures pricing and physical scarcity continues to define sentiment, leaving markets anchored to one unresolved question: how long can global oil flows operate under such restricted conditions before pricing forces a full reset?