HG MARKETS: 

Oil prices eased on Friday but remained on track to close the week above $100 a barrel for the first time since mid-May. Brent crude fell 1.53% to $105.98 a barrel, while U.S. West Texas Intermediate (WTI) declined 1.33% to $101.12. Despite Friday’s losses, both benchmarks remained more than 10% higher on a weekly basis.

The decline came after reports that Middle Eastern foreign ministers were working on a temporary arrangement with Iran to facilitate shipping through the Strait of Hormuz. The possibility of renewed diplomatic talks reduced some of the immediate supply concerns, although analysts continued to warn that oil markets could remain highly volatile.

Tensions remain elevated as Iran reported attacks on 10 ships near the Strait of Hormuz after the U.S. targeted five Iranian oil tankers. Vessel traffic through the strategic waterway dropped to seven on Thursday from 11 a day earlier, well below the 10-day average of 15. The Strait normally handles around one-fifth of global daily oil and liquefied natural gas supplies.

Supply risks have also widened beyond the Gulf, with Iran-aligned Houthis taking control of Yemen’s Mocha port and continued restrictions affecting Red Sea traffic. Attacks on Saudi energy infrastructure have further increased concerns over prolonged disruptions across the region, while the International Energy Agency expects global oil supply and demand to weaken as the Iran conflict delays a return to normal Middle Eastern flows.

Disruptions to crude and refining supplies are also pushing fuel prices higher. The U.S. national average diesel price surpassed $6 per gallon for the first time, according to Gas Buddy, as the Iran conflict and Ukrainian attacks on Russian refineries tightened refined-product supplies. Analysts noted that diesel and other refined products could continue to outperform crude prices while shipping restrictions and refinery outages persist.

Meanwhile, China’s state planner announced higher retail price caps for petrol and diesel effective September 12, increasing them by 260 yuan and 250 yuan per metric ton, respectively. Overall, oil markets remain supported by heightened geopolitical risks and supply disruptions, although any progress toward a temporary deal involving Iran and the Strait of Hormuz could trigger further short-term price volatility.