Oil futures fell on Friday after surging past $100 in the previous session, as profit-taking countered lingering supply fears fueled by escalating Middle East hostilities, Red Sea tanker attacks, and Russian export constraints.
Brent crude futures fell 1.2% to $99.42 per barrel, while Murban crude futures dropped 1.2% to $105.93/bbl.
On Thursday, Murban futures hit an all-time of $114.92 per barrel, while Brent futures hit its highest since May 22.
ING analysts noted that the potential supply disruptions facing the market are larger than at any time during the current conflict, with oil flows through the Strait of Hormuz effectively drying up and direct threats expanding to Saudi export routes.
Following Houthi attacks on Saudi tankers near the Bab al-Mandab Strait, tanker tracking data indicated that while Saudi Arabia has leaned heavily on its East-West pipeline to push crude out of the Yanbu terminal, these alternative channels are now increasingly under fire.
Compounding the geopolitical premium, physical bottlenecks have extended far beyond the Middle East.
Kazakhstan was reportedly forced to cut production following attacks on its Caspian Pipeline Consortium terminal in Russia, a critical route accounting for roughly 80% of the country's 1.8 million b/d crude exports.
Simultaneously, tight conditions in refined products persist as Russia weighs extending its diesel export ban amid ongoing Ukrainian strikes on domestic refining infrastructure.
With commercial traffic through the Strait of Hormuz remaining minimal despite marginal daily fluctuations, and US-Iran military exchanges showing no signs of de-escalation, physical market indicators reflect extreme tightness, market experts noted.
Dated Brent has surged to $105 per barrel, and analysts warn that unless a diplomatic off-ramp emerges, oil prices will remain highly sensitive to any further shocks along critical global trade arteries.