WTI and Brent crude oil futures experienced a more than 2% drop on Friday, as headlines emerged about potential truce talks between the U.S. and Iran, which diminished the war premium previously factored into crude prices. November WTI crude oil futures settled at $92.41, down $2.20 or 2.33%, while December Brent crude oil futures settled at $97.44, down $2.78 or 2.77%. U.S. gasoline futures also fell by approximately 4%, adding further downward pressure on crude prices as the product side of the market weakened.
Despite the price dip, significant supply risks remain. Traffic through the Strait of Hormuz declined to nine vessels on Thursday, a stark contrast to the 10-day average of 18 and the pre-war average of 125 large commercial vessels daily, indicating a bottleneck that suggests the strait is operating as a military corridor. Furthermore, a reported Iranian cruise missile strike on a vessel in the Strait of Hormuz, though unconfirmed, heightened concerns about potential further escalation and disruption. Saudi Arabia’s supply is also under threat due to Houthi attacks, which previously impacted shipments from the Red Sea port of Yanbu, although Saudi Aramco has increased exports through Hormuz to compensate.
Separately, a deal announced by former President Trump regarding Venezuelan oil has caused significant unease within the oil industry. The U.S. government is reportedly taking a 35% stake in North American Blue Energy Partners (NABEP), a private oil company led by Alejandro Betancourt, which has secured 100-year rights to develop 17 Venezuelan oil fields. This arrangement, orchestrated by the U.S. State Department and the Pentagon, reportedly blindsided major energy companies, including those already engaged in commercial talks in Venezuela. The deal raises concerns that the U.S. is effectively creating a de facto national oil company that could compete with American oil producers.
In terms of market outlook, the International Energy Agency (IEA) projects a global oil supply deficit of 1.8 million barrels per day for the third quarter of 2026, largely due to Hormuz flows being at roughly one-third of pre-war volumes. This deficit persists despite strategic reserve releases and reduced Chinese demand. Brent crude front-month closed at $96.78 on Friday, having traded around $101 earlier, and is up approximately 42% from its early July low of $71. Analysts suggest that if U.S.-Iran talks stall, physical oil markets could face unmanageable shortages.
