Oil prices were on track for their biggest weekly decline since March 2023, as fears of supply disruptions from the Iran-Israel conflict faded, erasing any risk-driven premiums. As of 0637 GMT on Friday, Brent crude futures were up 36 cents, or 0.53 per cent, at $68.09 per barrel, while US West Texas Intermediate (WTI) crude rose 33 cents, or 0.51 per cent, to $65.57. Despite the modest intraday gains, both benchmarks were poised for a weekly drop of around 12 per cent, according to Reuters. Prices have now fallen back to levels seen before the escalation began on June 13, when Israel launched missiles at Iranian military and nuclear facilities. At the start of the week, prices had surged to a five-month high following US strikes on Iranian nuclear installations. However, markets reversed course after US President Donald Trump announced a ceasefire agreement between Israel and Iran, leading to a steep drop on Tuesday. Analysts noted the lack of a meaningful disruption to oil flows from the geopolitical tensions. "Absent the threat of significant supply disruption, we still view oil as fundamentally oversupplied, with our 2025 balances indicating a roughly 2.1 million barrels per day (bpd) surplus," Macquarie analysts said in a research note quoted by Reuters. The firm revised its WTI price forecast upward by $2, now expecting an average of $67 per barrel in 2025 and $60 in 2026, factoring in lingering geopolitical risks.

Some support for prices emerged from US government data, which showed a decline in crude and fuel stockpiles last week, alongside a rise in refining activity and demand. "The market is starting to digest the fact that crude oil inventories are very tight all of a sudden," said Phil Flynn, senior analyst at the Price Futures Group. Additional bullish sentiment followed a Wall Street Journal report suggesting that President Trump is considering an early nomination for the next Federal Reserve chair. The move has revived expectations of potential interest rate cuts in the US, which could bolster oil demand.