Oil prices declined on Friday as reports that the United States may ease sanctions on oil tankers and accelerate emergency fuel releases raised expectations of improved global supply. However, escalating Middle East tensions and continued attacks near the Strait of Hormuz limited losses.
Brent crude futures dropped 0.48% to $105.41 per barrel by 03:39 GMT, while West Texas Intermediate (WTI) crude futures slipped 0.6% to $97.37 per barrel.
Despite Friday's decline, WTI crude was on track for a weekly gain of 6.2%, supported by Thursday's rally following data showing a significant reduction in U.S. oil inventories. Brent was heading toward a weekly increase of 0.9%.
Oil markets faced downward pressure after reports suggested Washington was considering relaxing sanctions on so-called shadow fleet tankers transporting petroleum from Russia, Iran, and Venezuela.
The potential policy change aims to reduce global shipping costs and ease soaring fuel prices. However, uncertainty remains over whether the Trump administration will implement the proposed measures.
The development follows a major diesel supply agreement between the United States and Russia announced last week, intended to address rising energy costs.
Meanwhile, the International Energy Agency (IEA) agreed Thursday to release more than 20 million barrels of diesel from emergency reserves. The agency also indicated plans to accelerate the distribution of remaining oil supplies from a previously announced March emergency release.
These efforts seek to stabilize diesel markets after disruptions involving Russian and Middle Eastern energy supplies pushed fuel prices to record highs.
Geopolitical risks continued to support crude oil prices as Iran launched additional attacks against vessels traveling through the Strait of Hormuz. Saudi Arabia and Yemen's Houthi forces also exchanged further strikes during the week.
President Donald Trump added to market uncertainty by suggesting that additional U.S. military operations against Iran could follow the November 3 midterm elections.
Meanwhile, Ukraine's announcement that it intends to resume strikes against Russian energy infrastructure raised concerns about further supply disruptions.
The IEA reported that Middle Eastern crude exports recovered to approximately 75% of prewar levels in September, suggesting gradual improvements in regional supply.
Nevertheless, the agency warned that global diesel shortages could persist into 2027, even as it projected weaker worldwide oil demand this year.
