EMEA crude futures retreated in after-hours trading on Friday, but remained on track for a weekly gain, as escalating attacks on shipping in the Middle East raised concerns about prolonged disruptions to global crude supplies.
Brent crude futures fell 2.3% to $105.15 per barrel, while Dubai 1st Line Futures were down 0.68% to $115.55/bbl.
Saxo Bank strategists said prices are slightly softer amid reports that Gulf foreign ministers plan to meet their Iranian counterparts on Monday, as Oman and Iran seek regional backing for a temporary agreement to manage shipping via the Strait of Hormuz.
Top diplomats from the six-member Gulf bloc reportedly plan to meet Iranian officials on Monday in a push by Oman and Iran to secure buy-in for a deal to temporarily manage shipping through Hormuz.
Iranian Foreign Ministry Spokesman Esmaeil Baghaei said that the meeting would bring together Iran, Iraq and other countries bordering the Persian Gulf and Gulf of Oman, describing the initiative as an important step toward strengthening regional understanding and cooperation.
Baghaei said that the meeting is also expected to address the outcome of recent Iran-Oman talks on establishing safe routes for commercial shipping via the Hormuz.
Pressuring prices, the International Energy Agency said on Friday that disruptions to global oil supplies are forcing lower consumption. The IEA slashed its forecast for this year's decline in global oil demand by 940,000 barrels per day, projecting a drop of 2.5 million b/d.
The agency projected that 2026 will see the biggest contraction in global oil demand since the Covid-19 pandemic, driven by higher fuel costs and lower supply.
Crude demand is forecasted to recover by 2.6 million b/d in 2027, narrowly offsetting this year's losses, the EIA said.
Meanwhile, the Middle East conflict has widened over the past two weeks, with Houthi assaults on Saudi energy facilities and US strikes targeting Iranian oil tankers.
Yemen's Houthis seized control of the port city of Mocha on Thursday and advanced down the Red Sea coast to strategic islands, posing further threat to Red Sea traffic, as traffic via the Hormuz remains restricted as tanker attacks in the region have intensified.
The militant group advanced to Perim Island in the Bab el-Mandeb, potentially strengthening its ability to threaten another key chokepoint for oil and refined-product shipments between the Middle East and Europe.
Soojin Kim, research analyst at MUFG, said with both Hormuz and Bab al-Mandeb facing growing security risks and little prospect of a near-term US-Iran truce, disruption to Saudi and wider Gulf exports could keep crude and refined-product prices elevated.
On the supply front, US commercial crude oil inventories decreased by 400,000 barrels to 424.1 mmbbls in the week ended Sept. 4, the Energy Information Administration said in its weekly report released Thursday.
Crude inventories matched the five-year average for this time of year, the EIA said. The draw is significantly below Investing.com's estimate of 1.4 million barrels for the week ended Sept. 4.