Oil prices declined on Friday, 16 October 2026, but remained on track for weekly gains as uncertainty over Middle Eastern supplies and a larger-than-expected reduction in US crude inventories continued to influence trading.
Brent crude futures fell 47 cents, or 0.44%, to $105.45 a barrel at 07:47 GMT, while US West Texas Intermediate (WTI) futures declined 62 cents, or 0.63%, to $97.35 a barrel.
Despite Friday’s losses, Brent was heading for a weekly increase of 0.72%, while WTI had gained 5.9%. The US benchmark rose more than 3% on Thursday following a substantial reduction in domestic crude inventories, partly attributed to hurricane-related production shutdowns.
Meanwhile, European diesel refining margins weakened after the International Energy Agency (IEA) agreed to release additional diesel supplies into the market.
Strait of Hormuz Disruptions Support Oil Prices
Concerns about the reliability of oil shipments through the Strait of Hormuz remained a significant influence on crude prices.
The strategic waterway is an important route for Middle Eastern energy exports, and continued military activity has raised questions about the availability of regional supplies.
Analysts at ING said uncertainty surrounding the conflict was contributing to higher prices.
“Uncertainty in the Middle East and concerns over the sustainability of oil flows through the Strait of Hormuz has the market pricing in a significant risk premium,” the analysts wrote.
ING added that an agreement between the United States and Iran would be necessary to provide greater confidence that oil shipments from the region could recover and remain stable.
Attacks near the Strait of Hormuz have intensified over the past 10 days, according to the report.
Iran said it was increasing its strikes in response to the US blockade of its ports and additional sanctions introduced during the previous month.
Shipping data indicated that oil movements through the waterway remained substantially below normal levels.
According to vessel-tracking company Kpler, total clearance through the Strait of Hormuz averaged 11.62 million barrels per day during the seven days ending 13 October.
That represented approximately 68% of the baseline level of 17.15 million barrels per day, indicating a reduction of around 5.53 million barrels per day.
Kpler analysts said the recent escalation had further restricted regional shipments.
“Intensified Iranian attacks drove Gulf crude flows sharply lower,” the analysts wrote in a report published Thursday.
They added that a recovery in shipping volumes was likely to remain slow and uneven without a comprehensive political agreement.
US Crude Inventory Decline Supports WTI
US crude oil prices received additional support from a substantial reduction in domestic inventories.
WTI futures increased by more than 3% on Thursday after data showed a larger-than-expected drawdown in US crude stockpiles.
The reduction was linked partly to production disruptions caused by hurricane-related shutdowns.
Temporary interruptions to offshore oil production can reduce domestic supply availability and influence inventory levels.
The inventory figures contributed to WTI’s stronger weekly performance compared with Brent.
By Friday morning, the US benchmark had gained 5.9% for the week, compared with a 0.72% increase in Brent crude.
However, both contracts moved lower during Friday’s session as traders assessed the latest supply developments.
European Diesel Margins Fall Following IEA Supply Release
European diesel refining margins declined after the International Energy Agency agreed on Thursday to release more than 20 million barrels of diesel into the market.
Margins fell by nearly 2% on Friday to $78.67 a barrel.
The decision was intended to increase available supplies at a time when diesel markets have experienced significant pressure from geopolitical disruptions.
European diesel margins had reached approximately $95 a barrel in September as supply tightened amid the conflicts involving Ukraine and Iran.
The planned release of additional diesel provides a potential source of short-term supply relief, although the extent of its effect will depend on market conditions and the distribution of the released volumes.
The decline in refining margins contrasted with the broader strength in crude oil prices during the week.
Regional Conflict Raises Further Energy Supply Risks
Developments elsewhere in the Middle East added to concerns about regional security and energy infrastructure.
On Thursday, Houthi forces launched missiles towards the presidential palace complex in Aden, southern Yemen, killing two guards, according to the report.
The Saudi-led coalition operating in Yemen also reported dozens of attacks targeting Saudi infrastructure as the conflict intensified.
These developments contributed to the broader geopolitical uncertainty affecting energy markets.
Military activity near shipping routes and energy facilities can influence transportation costs, supply availability and the risk premiums reflected in oil prices.
US Considers Easing Sanctions on Some Oil Tankers
The Trump administration is reportedly examining whether to remove sanctions on certain vessels associated with the so-called shadow fleet, according to comments from a US official on Wednesday.
The vessels have previously transported crude oil and petroleum products originating from countries including Russia, Iran and Venezuela.
The discussions are intended to address record global freight rates, which have increased transportation costs for energy shipments.
The potential changes follow President Donald Trump’s temporary suspension of sanctions on Russian diesel fuel earlier in the week.
That decision drew criticism from Ukrainian President Volodymyr Zelenskiy, European governments and some Republican lawmakers in the United States.
No final decision on the wider removal of sanctions from shadow fleet vessels was confirmed in the report.
Any changes could affect tanker availability and freight costs, although their impact would depend on the scope and implementation of the measures.
Oil Market Outlook Remains Dependent on Supply Developments
Oil prices were heading for weekly gains despite declining on Friday, with WTI outperforming Brent following a substantial reduction in US crude inventories.
The market continued to reflect uncertainty over shipments through the Strait of Hormuz, where reported volumes remained considerably below normal levels.
At the same time, the IEA’s decision to release additional diesel supplies provided some relief to European refined-product markets.
Investors will continue to monitor developments involving Iran, the security of Middle Eastern shipping routes, US crude inventories and potential changes to American energy sanctions.
These factors remain central to expectations for global oil supply and prices.