Oil prices ease as recovering Hormuz Strait traffic tempers war premium

Oil prices fell Friday as tanker traffic through the Strait of Hormuz showed signs of recovery, easing supply fears that had pushed crude higher earlier in the week following renewed U.S.-Iran hostilities. Commonwealth Bank of Australia reported stronger oil flows through the critical chokepoint in a Friday note, signaling that shipping disruptions from the strikes were proving temporary. The strait handles roughly one-fifth of global oil flows, making any disruption an immediate catalyst for price volatility.

The decline extended losses from earlier in the session as traders reassessed the war premium built into crude following this week's exchanges between Washington and Tehran. Markets had initially spiked on supply-disruption fears, but normalizing traffic patterns suggest those concerns were overblown.

The reversal highlights how quickly geopolitical premiums can evaporate when physical flows stabilize. With Hormuz traffic recovering, the question now shifts to whether tensions escalate further or subside.