Oil Prices Steady After Drone Strikes, Inventory Drop Signals Market Tightness

Oil prices held steady in Asian trading on Friday, following sharp gains driven by drone strikes on Iraqi oil fields and signs of tightening global supply. Brent crude futures for September remained unchanged at $69.51 per barrel, while West Texas Intermediate (WTI) crude stayed flat at $67.51.

Despite rising over 1.5% on Thursday, oil benchmarks were still on track for weekly losses exceeding 1%, pressured by geopolitical developments. U.S. President Donald Trump eased sanctions threats against Russia, granting a 50-day deadline to end the Ukraine conflict, which trimmed bullish momentum seen earlier in the week.

Supply concerns resurfaced as drone attacks, reportedly launched by Iran-backed militias, disrupted about half of Iraqi Kurdistan’s crude output. However, Iraq’s federal government announced progress in talks with the Kurdistan Regional Government, signaling a potential resumption of oil exports to Turkey after a two-year pause.

Further support came from the latest U.S. Energy Information Administration (EIA) data, which showed crude inventories fell by 3.9 million barrels last week—more than double analysts’ expectations. This decline underscores tightening conditions amid high summer demand.

OPEC maintained its oil demand forecasts for 2025 and 2026, citing optimism that global trade tensions may ease. Last week, oil prices climbed nearly 3% as the International Energy Agency (IEA) pointed to a tight prompt market, even as OPEC+ output exceeded expectations.

While rising output typically signals easing prices, the IEA warned that increasing refinery activity to meet seasonal demand could mask the true extent of supply constraints. This dynamic, combined with ongoing geopolitical risks, continues to support oil prices despite recent volatility.