Oil prices retreated on Friday after a surge in the prior session but markets remained on edge with the Strait of Hormuz still closed and after attacks on tankers this week that have combined to revive fears for global energy supplies.
Brent crude futures fell 2.9% to $97.75 per barrel, while Murban crude futures dipped 9.5% to $97.04/bbl. Both contracts were headed for their third straight week of gains.
On Thursday, Murban futures hit an all-time of $114.92 per barrel while Brent futures hit their highest since May 22.
ING analysts noted that the potential supply disruption facing the market is 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.
Attacks by Yemeni Houthi rebels on Saudi tankers have reduced the scope for Saudi Arabia to rely on the Red Sea as an alternative export route to the Hormuz Strait, market observers said, a backstop facilitated by Saudi Arabia's East-West pipeline.
Other bottlenecks appeared during the week, compounding the global oil's supply woes.
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 minimal and back-and-forth US-Iran military strikes showing no signs of slowing up, physical market indicators reflect extreme tightness, analysts said.
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 logistical or supply shocks.