Crude oil prices head for second weekly drop amid supply surplus concerns

Global oil prices declined on Friday and headed for a second straight weekly drop as a growing global supply surplus weighed heavily on the market. Brent futures dropped by 5 cents to $95.77 a barrel by 11:46 a.m. CDT, while US West Texas Intermediate futures fell 17 cents to $88.57 a barrel. Both benchmark crude contracts were on track for a weekly decline of around 2%, following much steeper losses the previous week. Market sentiment shifted away from supply shortages due to easing geopolitical risks and an International Energy Agency report showing a rising global oil surplus. Phil Flynn from the Price Futures Group noted that the main market fear had flipped from a shortage to an excess supply. Earlier in the week, prices fluctuated amid strikes on Saudi Arabian infrastructure by Yemen's Houthis and attacks on tankers near the Gulf. US President Donald Trump stated on Truth Social that a deal with Iran was not required to end the ongoing war. Sugandha Sachdeva of SS WealthStreet explained that Trump's comments suggested Washington might rely more on economic sanctions and oil shipment restrictions instead of deeper military operations. Lower US demand further drove down prices, with the Energy Information Administration reporting higher crude and fuel inventories due to weaker refined product demand and increased oil imports. Meanwhile, shipping risks persisted near the Strait of Hormuz after Iran reported explosions hitting four tankers, and the Houthis claimed attacks on Saudi Arabian oil facilities and an Aramco building in Riyadh.

Context

Global oil markets are highly sensitive to political tensions in the Middle East and shifts in fuel demand from major economies like the United States. Changes in crude inventories and international supply reports regularly dictate short-term price movements for petroleum products.