Crude oil prices weakened during Friday’s trading (October 16) but remained on track for a weekly gain. Brent crude fell 0.74% to US$105.14 per barrel, while West Texas Intermediate (WTI) declined 1% to US$96.98 per barrel. The drop followed a commitment by the International Energy Agency (IEA) to release remaining emergency oil reserves, alongside the potential for the U.S. to ease sanctions on certain vessels within the "shadow fleet."
Nevertheless, downward pressure on prices remains limited, as the risk of supply disruptions from the Middle East stays high. Attacks in the vicinity of the Strait of Hormuz have intensified over the last 10 days, with Iran signaling an escalation in response to U.S. blockades of its ports and the imposition of stricter sanctions.
The IEA had previously agreed to release over 20 million barrels of diesel into the market. This move immediately pressured European diesel refining margins, which fell by nearly 2% to US$78.67 per barrel on Friday. However, Saxo Bank suggests that this release of reserves may not be sufficient to address the ongoing tightness in diesel supply.
Regarding crude oil supply, a larger-than-expected decline in U.S. inventories continues to provide support. WTI had surged more than 3% on Thursday following data that revealed a significant drop in U.S. crude stocks, driven by production disruptions caused by storms.
Meanwhile, tensions in the Middle East remain a primary concern for the market. The Houthi group launched a missile attack on the presidential palace complex in Aden, killing two guards, while the Saudi-led coalition reported dozens of attacks targeting Saudi infrastructure. These developments have heightened concerns regarding the uninterrupted flow of oil through the region.