Oil prices are falling amid global expectations regarding Iran
Oil prices in the US and Europe fell by 6% over the week amid expectations of a resolution to the conflict with Iran, despite ongoing tensions in the region. Analysts predict that high prices will persist until the end of the year due to shrinking reserves and steady demand.
Petrus
Oil prices in the US remained within a narrow range on Friday, but ended the week lower amid expectations of an imminent resolution to the conflict with Iran.
Despite reports of attacks and retaliatory strikes during the passage of American warships through the Strait of Hormuz, a ceasefire remains in effect in the region. Washington is awaiting Tehran’s response to the US proposal to end the conflict and reopen the strait.
The price of West Texas Intermediate (WTI) crude fell by 6% over the week, dropping to just under $95 per barrel. During the day, WTI futures showed little change by the close of trading.
European Brent futures also finished the week down 6%, approaching the $100 per barrel mark. Like WTI, the Brent index rose by less than one percent on Friday.
According to reports from Pakistan, where mediation talks are underway, the parties to the conflict are close to reaching an agreement.
Prolonged blockage of the Strait of Hormuz and a significant reduction in oil reserves have led to forecasts that high oil prices will persist through the end of the year. Analysts note that even with a favorable outcome, oil prices may remain relatively low due to steady demand and rapid depletion of reserves. The average oil price in 2026 is projected to be around $100 per barrel.
The recent statement by the US government about plans to release additional oil volumes from the Strategic Petroleum Reserve (SPR) under a swap agreement has had little noticeable impact on the market. Analysts explain that measures related to the SPR, available capacities, and the potential US response on the supply side are mainly aimed at addressing crude oil supply issues, while the shortage of refined products, especially middle distillates, remains a more serious constraint.
Natural gas prices in the US were virtually unchanged on Friday, both for the day and the week. The Henry Hub index closed at around $2.75 per million British thermal units. Henry Hub prices remain largely unaffected by events in the Middle East.
The situation in Europe is different: gas prices surged after Iran blocked a fifth of the world’s oil and gas supplies by closing the strait.