Friday price retreat after weekly surge
Brent crude settled at $96.78 a barrel on Friday, down $3.91 or 3.88%, after briefly crossing $100 in the previous session for the first time since May. West Texas Intermediate ended the session at $89.31 a barrel, falling $2.88 or 3.12%. Despite the decline, both benchmarks were on track for substantial weekly gains—Brent heading for nearly 10% and WTI on pace for an 8.27% increase. One weekly recap reported WTI closing near $90.46 after a 10% weekly surge, while Brent briefly surpassed $100 before settling at $97. The Indian oil basket jumped 11% in a single session to $103.33 per barrel on Thursday, its highest level in two months.
Houthi attacks and Strait of Hormuz disruption
Oil prices had surged earlier in the week as the United States and Iran traded missile strikes, shipping through the Strait of Hormuz dropped to a trickle, and Yemen's Houthis launched attacks on vessels in the Red Sea. Iran-aligned Houthi forces claimed drone and missile attacks on two Saudi oil tankers, the Encelia and Layla, with the Saudi Press Agency confirming the Encelia was set ablaze while sailing overnight. The attacks opened a second shipping front beyond the Strait of Hormuz. The Houthis also announced a naval blockade against Saudi Arabia, prompting US President Donald Trump to threaten "major military punishment" against Iran and its Houthi allies. The US launched its 13th consecutive day of strikes on Iran, while Iran had been pushing the Houthis to shut the Bab el-Mandeb gateway to the Red Sea if US attacks on Iranian power infrastructure continued.
Kazakhstan supply shock compounds pressure
The Caspian Pipeline Consortium suspended crude loadings at its Black Sea terminal after Ukrainian tanker attacks, disrupting the route that carries approximately 80% of Kazakhstan's oil exports. Kazakhstan's energy ministry said oil producers had temporarily cut output after suspected Ukrainian drone attacks led to the closure of the country's main Black Sea export terminal. RBC's Helima Croft noted Kazakhstan's 1.7 million barrels per day of production could face shut-ins, as alternate routes cannot fully offset the CPC closure.
Diplomatic push from China and Pakistan
Friday's price retreat followed reports that China had begun efforts to revive stalled US-Iran peace negotiations, with Pakistan looking at ways to help restart talks aimed at ending the war. Islamabad is heavily reliant on Beijing, which has provided significant financial support and has economic interests in a diplomatic resolution to help reopen trade routes across the Middle East. Despite the Friday retreat, momentum indicators had signalled the rally was overdue for a pause, and the peace talk headlines provided the trigger. Market participants warned that nothing structural had changed: Hormuz remained disrupted, the Red Sea was now contested, and Kazakhstan's exports were strained.
OPEC+ signals additional supply
Some respite emerged after OPEC pledged to increase supply. Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman were expected to raise their combined September production target by 188,000 barrels per day, according to Reuters. The move offered brief relief to a market still rattled by Middle East supply risks. Meanwhile, citing a notice posted on the US Treasury Department's website Friday, Reuters reported that the US would allow certain transactions involving Lukoil International GmbH to continue until Aug 22.
Kuwait pipeline deal and EIA inventory report
Kuwait Petroleum Company signed a $16 billion leasing agreement with Blackstone, Brookfield Asset Management and KKR for 13 crude pipelines, with Kuwait Oil Company retaining a 51% majority stake. The deal generates $7.85 billion in upfront proceeds to support Kuwait's target of four million barrels per day production by 2035, and marks the first direct investment in Kuwait for both Blackstone and KKR. Separately, the US Energy Information Administration reported commercial crude stockpiles rose 2.0 million barrels for the week ending July 17, 2026, to 411.7 million barrels, reversing a multi-week draw sequence. Total commercial petroleum inventories across all products rose 11.6 million barrels in the same week, with gasoline stocks adding 0.8 million barrels, distillates gaining 1.4 million barrels, and propane/propylene surging 6.3 million barrels. US refiners processed 17.1 million b/d at 96.1% capacity utilization.
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