Oil Slips Below $88 as Hormuz, Russia Risks Weigh on Crude Markets

Oil prices slipped on Friday, with Brent crude edging toward the $88 handle as the market absorbed fresh uncertainty over the Strait of Hormuz and mounting tensions between Russia and Ukraine. Both benchmarks were on track to snap a two-week winning streak.

Brent crude futures fell 0.19% to $88.35 a barrel at the start of Asian trading on August 28, according to NDTV Profit. West Texas Intermediate crude declined 0.29% to $83.29. Later in the session, Reuters reported Brent at $89.66 a barrel at 0943 GMT, while the Wall Street Journal cited a separate reading of $89.45. The intraday moves left both benchmarks set to end the week sharply lower: Brent down 5.1% to 5.3% and WTI falling 4.3% to 4.5%, depending on the data point.

**Hormuz Flows Remain Uneven**

The Strait of Hormuz, a chokepoint for about 20% of global oil supply, has seen only a tentative recovery in shipping. Preliminary data cited by Reuters showed seven commodity vessels transited the waterway on Thursday, down from 17 a day earlier and below the 10-day average of 15. Goldman Sachs estimated total Gulf exports recently stood at 15 million to 16 million barrels per day—7 million to 8 million bpd below pre-war levels but above the March trough.

Iranian officials have signaled conditions for reopening the strait. NDTV Profit reported that Iran’s Supreme National Security Council secretary, Mohsen Rezaei, said Tehran had agreed with Oman on a shipping corridor, but linked full reopening to an end to the regional conflict, the removal of what Tehran calls a blockade of Iranian ports, compensation, and the lifting of sanctions. A Guards spokesperson separately stated the strait would not reopen unless those conditions are met.

The United States earlier this week announced what it described as the “toughest sanctions in history” on Iran. Tehran called the move an “inhumane and hostile act” that had lost its effectiveness. A Wall Street Journal report, cited by the Economic Times, said the Trump administration had repeatedly told mediators it has no interest in reviving the June memorandum of understanding with Iran, complicating diplomatic efforts.

“A combination of US tactics moving to economic sanctions rather than military pressure and talks of Oman-Iran’s joint corridor have led to risk premiums declining,” Suvro Sarkar, head of energy research at DBS Bank, told Reuters.

**Russia-Ukraine Tensions Add Supply Risk**

Alongside Hormuz, the conflict in Ukraine is generating fresh concerns over global refined fuel supplies. NDTV Profit reported that Ukrainian strikes on Russian refineries and ports are disrupting energy infrastructure, potentially limiting Russia’s ability to export crude and products. That comes as diesel markets already show signs of tightness.

According to the Economic Times, Moscow warned it could strike British military targets inside and outside Ukraine in response to Kyiv’s use of British-supplied long-range cruise missiles. Russian President Vladimir Putin said talks with Ukraine had produced no results and that Moscow was preparing to intensify the war, NDTV Profit added.

“We are of the attitude of being prepared for everything but predicting nothing,” said John Evans, analyst at PVM Oil Futures, adding that OPEC developments and China’s demand remained linked to the wider conflict.

**Venezuela OPEC Exit Under Examination**

In a separate development, Venezuela is examining a potential exit from OPEC, according to people familiar with the matter reported by NDTV Profit. While the country’s diminished production means an immediate supply impact is likely limited, a withdrawal could raise fresh questions about OPEC’s cohesion.

Reuters reported that analysts cited by Indian news agency PTI said reports of a possible US role in Venezuela’s oil industry also weighed on prices as the market assessed the chance of increased output from the South American producer.

Anindya Banerjee, head of commodity and currency research at Kotak Securities, told Reuters that Brent was trading lower as Washington’s shift from military to economic pressure had reduced fears of a wider war. He added that Iran and Oman had reached a partial arrangement on sharing revenue from Hormuz traffic, although Tehran said a full deal remains blocked.

“The easing in prices reflects a market moving away from extreme conditions, although the underlying supply remains tight,” Banerjee said.