Brent crude for July delivery fell 0.6% on Friday, pulling back from recent highs as markets reassessed geopolitical risk premiums. Commodity analysts at Standard Chartered attributed the drop to heavy algo-selling triggered by positive statements from the U.S. regarding a potential partial reopening of the Strait of Hormuz, despite what the bank described as contradictory messaging from Washington and Tehran.
The retreat comes as Saudi Arabia is expected to slash official selling prices for crude loading to Asia in July. According to a Reuters survey of industry sources, the kingdom may cut the price of its flagship Arab Light crude by $3 to $8 per barrel from June, to a premium of between $7.50 and $12.50 a barrel over the Oman/Dubai benchmark. Weak demand and narrowing spot premiums for Middle East crude are driving the anticipated reduction.
Meanwhile, U.S. crude exports hit an all-time high, according to recent data, with the Strategic Petroleum Reserve releases contributing to elevated outflows. The surge in American shipments is reshaping global supply flows even as OPEC+ members grapple with softening demand in Asia, particularly from top importer China.
Standard Chartered noted that underlying balances are tightening and barrels are being lost from the system, even as algorithmic trading amplified the sell-off. The analysts suggested the market had optimistically priced in a normalization of Strait of Hormuz transit, a scenario that remains far from confirmed given continued U.S. rhetoric and unresolved tensions with Iran.