Oil prices declined during Asian trading on Friday but recovered most of their earlier losses as concerns about supply disruptions tied to the U.S.-Israel conflict with Iran continued to dominate market sentiment.
Prices had initially dropped by as much as 1% after Washington said it would allow the purchase of certain Russian oil shipments already at sea, a move aimed at easing supply pressures linked to the Iran conflict.
However, crude quickly recouped much of those losses and remained on course for a second consecutive week of strong gains, as the conflict in Iran — which has been the main driver behind the recent rally in oil — showed little sign of easing.
By 02:17 ET (06:17 GMT), Brent crude futures for May were down 0.1% at $100.34 per barrel, while West Texas Intermediate (WTI) crude futures slipped 0.4% to $94.05 per barrel.
U.S. permits purchases of Russian oil already in transit
Late Thursday, the U.S. Treasury issued a 30-day waiver allowing countries to buy Russian crude shipments that had already been loaded onto tankers before March 12.
Treasury Secretary Scott Bessent said the decision was intended to help stabilize global energy markets amid supply disruptions related to the war with Iran.
Earlier in the week, Washington had already granted limited exemptions for Russian oil purchases, allowing India, the world’s third-largest crude importer, to receive shipments from Moscow.
The development comes as tensions with Iran remain elevated, with the United States also signaling it may release significant volumes from its Strategic Petroleum Reserve to help cushion supply shocks.
Reports earlier this week indicated that the International Energy Agency is preparing a record emergency release of more than 400 million barrels from strategic reserves to offset the impact of the Iran conflict.
Oil still on track for strong weekly gains as Iran war continues
Despite Friday’s modest pullback, both Brent and WTI crude futures were set to post weekly gains of roughly 7% to 9%, extending the sharp rally sparked by the escalating conflict.
Oil prices had already jumped nearly 30% last week.
The conflict entered its fourteenth day on Friday as Israel and the United States continued strikes on Iran, while Tehran responded with waves of missile and drone attacks targeting oil infrastructure in several neighboring Middle Eastern countries.
Iran has also threatened to close the Strait of Hormuz, a critical shipping corridor for global energy supplies, in an effort to pressure Washington and its allies.
The potential closure of the strait — combined with attacks on oil facilities — has intensified fears of prolonged disruptions to global crude supply. The waterway is particularly significant because roughly 20% of the world’s oil consumption passes through it.
“The conflict has now moved beyond a short-lived geopolitical shock and into a phase where supply losses are increasingly structural rather than transient,” ANZ analysts wrote in a note.
“Price volatility is likely to remain high, but the skew is increasingly to the upside. Importantly, the longer the disruption persists, the higher the price required to restore market balances.”
Investors remain cautious about the prospect of a sustained surge in oil prices, as higher energy costs could push inflation upward and lead major central banks to adopt a more hawkish monetary policy stance.