Crude oil prices continued their downward slide on Friday. This extended losses from the previous trading session. Market worries about potential supply disruptions eased significantly. The reduced likelihood of a U.S. military strike on Iran played a key role in calming investor nerves.
Price Movement Details
Brent crude futures slipped by 21 cents on Friday. This represented a decline of 0.3 percent. The price settled at $63.55 per barrel. Meanwhile, U.S. West Texas Intermediate crude also fell. It dropped 15 cents, or 0.3 percent, to reach $59.04 a barrel.
Back in India, the domestic market reflected subdued global cues. On the Multi-Commodity Exchange, February crude oil contracts traded flat. They held steady at ₹5,366 per barrel.
Thursday's Sharp Correction
The current decline follows a substantial drop on Thursday. Crude oil prices closed nearly 4 percent lower that day. This snap ended a five-session rally. The shift in sentiment came after comments from U.S. President Donald Trump. He indicated that the crackdown on protesters in Iran was easing.
Specifically, Brent crude futures fell $2.76 on Thursday. This was a 4.15 percent decline. They settled at $63.76 a barrel. U.S. West Texas Intermediate crude slipped $2.83. That drop amounted to 4.56 percent, with prices closing at $59.19.
What Drove the Earlier Rally and Subsequent Fall?
Both major oil benchmarks had climbed to multi-month highs earlier in the week. This surge was triggered by specific geopolitical events. Protests erupted in Iran. Concurrently, President Trump hinted at possible U.S. strikes on the country. These factors created a risk premium in the market.
Despite the recent pullback, Brent crude remained on track for a notable achievement. It was heading for a fourth consecutive week of gains, underscoring the underlying volatility.
Key Factors Easing Tensions
President Trump provided crucial context for the market's shift. He stated he received information that the pace of killings during Iran's protest crackdown was slowing. He also clarified there was no immediate plan for mass executions. This signaled a more cautious, wait-and-watch approach from Washington. It dialed back earlier remarks that had hinted at military intervention.
Further reports added to the de-escalation narrative. Reuters quoted a U.S. official saying Washington was pulling some personnel from military bases in the Middle East. This move followed a warning from a senior Iranian official. Tehran had cautioned neighboring countries it would target U.S. bases if America launched strikes.
Additional Downward Pressure on Prices
Fundamental supply data also weighed on prices. The U.S. Energy Information Administration released a report on Wednesday. It showed U.S. crude and gasoline stockpiles rose more than analysts expected last week. Increasing inventories typically signal weaker demand or ample supply, putting downward pressure on prices.
Separately, developments in Venezuela added to the supply outlook. According to three sources, Venezuela has started rolling back oil output cuts. These cuts were imposed under a U.S. embargo. The country's crude exports are also resuming.
Analyst Perspectives on Market Sentiment
Analysts speaking to Reuters noted a turn in market sentiment. It became more bearish after a positive phone conversation. President Trump spoke with Venezuela's acting President Delcy Rodríguez on Wednesday. This raised expectations of short-term stability. It also increased anticipation of higher Venezuelan oil flows in the coming weeks.
Rahul Kalantri, VP Commodities at Mehta Equities Ltd, commented on the situation. "Crude oil prices fell sharply by nearly 4% in the previous session," he said. "This was driven by easing geopolitical risk premiums. President Donald Trump dialled back earlier threats of military action against Iran. He did this after receiving assurances that executions would not take place. Reports also suggested that Israel and other Middle Eastern allies advised Washington to postpone any potential strike. These factors reduced concerns over near-term supply disruptions from Iran or key regional shipping lanes."
Kalantri added an important note on the weekly trend. "Despite the correction, crude prices remained on track for a modest weekly gain. This gain was underpinned earlier by unrest in Iran, political turmoil in Venezuela, and supply disruptions impacting Kazakhstan's Black Sea exports."
Crude Oil Prices Outlook and Forecasts
Choice Institutional Equities shared its view in a research note. The firm stated that supply disruptions often evolve into sustained constraints. Whether these disruptions are geopolitical or operational, they can provide sustained support for oil prices.
"We expect that broad oversupply would likely keep upward pressure on prices subdued," the firm said. "This oversupply is underpinned by resilient U.S. production and expanding inventory levels."
The firm provided a longer-term forecast. It expects Brent crude to average $61.5 per barrel in 2026. This prediction considers increased market competition. Factors include relentless supply of oil from the U.S. at lower prices, the gradual unwinding of production cuts by OPEC+ nations, and the possible removal of sanctions on Russian firms Rosneft and Lukoil.
Near-Term Trading Levels
Rahul Kalantri of Mehta Equities offered insights for traders. He expects crude oil prices to remain volatile in the near term. For the U.S. benchmark, he identified support levels at $58.40-$57.70. Resistance is seen at $59.70-$60.40 for today's session.
In Indian rupee terms, Kalantri noted support for crude oil at ₹5,270-5,210. Resistance levels are positioned at ₹5,395-5,455. These levels provide guidance for market participants navigating the current volatility.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
