Oil prices declined on Friday but remained on course for their strongest weekly advance in months as escalating disruptions around key Middle East shipping routes continued to threaten global energy supplies. Brent crude settled at $104.61 a barrel, while U.S. West Texas Intermediate finished at $100.05, with both benchmarks having reached their highest intraday levels since mid-May.

Crude Prices Remain Above the $100 Threshold

Brent fell $3.02, or 2.81%, on Friday, while WTI declined $2.43, or 2.37%. Despite the pullback, both contracts remained on track for weekly gains of more than 8%, illustrating the scale of the repricing that has taken place across energy markets.

The decline followed reports that Middle Eastern foreign ministers were working toward a temporary arrangement with Iran to manage shipping through the Strait of Hormuz. The possibility of negotiations reduced some of the immediate risk premium embedded in crude prices after oil gained more than 6% on Thursday following an escalation in regional shipping attacks.

However, the underlying supply picture remains fragile. The Strait of Hormuz previously handled about 125 commodity vessels and approximately one-fifth of global daily oil and liquefied natural gas supplies before the Iran war began in late February. Preliminary tracking data showed only seven vessel transits through the strait on Thursday, down from 11 a day earlier.

Saudi Supply Disruptions Add to Global Energy Risk

Saudi Arabia is also facing infrastructure-related pressure. Satellite imagery showed smoke near the kingdom’s East-West Pipeline, an important route that allows Saudi Arabia to move crude exports while avoiding the Strait of Hormuz. Reports indicated that a pumping station had been damaged by Iran-affiliated militants, creating another potential constraint on regional supply flows.

The International Energy Agency said Saudi crude supply fell by 2.3 million barrels per day in August to 6 million barrels per day, the lowest level in more than three decades. The decline reflects the growing effect of attacks on Saudi energy infrastructure and demonstrates how geopolitical disruptions can quickly affect physical oil availability.

Additional pressure is emerging around the Bab el-Mandeb Strait, where Iran-aligned Houthi forces reached the island of Perim, according to Yemeni government sources cited by Reuters. Any further deterioration around these maritime chokepoints could increase transportation costs and extend delivery disruptions for crude and refined products.

U.S. Diesel Surges Above $6 as Refined Products Tighten

The impact is increasingly visible beyond crude futures. The U.S. national average diesel price surpassed $6 a gallon for the first time on Thursday, according to GasBuddy. The increase reflects a combination of supply disruptions linked to the Iran war and Ukrainian attacks on Russian refineries.

Refined products are therefore showing greater sensitivity than crude itself. Market analysts cited by Reuters said Gulf shipping constraints and Russian refinery outages could keep diesel and other refined products under upward pressure even if crude prices experience periods of consolidation.

Looking ahead, the market will focus on developments around the Strait of Hormuz, Saudi infrastructure, Russian refining capacity and the possibility of diplomatic arrangements that could restore shipping flows. The next phase of the oil market will depend on whether supply disruptions become temporary or structural. Continued pressure on diesel and other refined products could also feed into transportation costs, inflation expectations and central-bank policy, making energy markets an increasingly important variable for the global economic and financial outlook.