Crude oil prices have trended lower over the past several days, but both major benchmarks remain on track to post gains for the week and the month. On a monthly basis, Brent crude and West Texas Intermediate (WTI) have each climbed nearly 20%.

At the time of writing, Brent crude was trading at $87.67 per barrel and WTI at $82.07 per barrel, with both benchmarks down approximately 1% from Thursday. The decline followed reports of additional tankers transiting the Strait of Hormuz, even as hostilities between Iran and the United States persist. The strait normally carries roughly a fifth of global oil demand, making any disruption to its flow a central driver of crude price volatility.

"There is this sense that there is a lot of supply waiting to hit the market once all of this is resolved, and that is a weight against any kind of dramatic price rise," Again Capital partner John Kilduff said, as quoted by Reuters. OPEC+ has been withholding millions of barrels per day of production through coordinated cuts, meaning substantial spare capacity exists that could theoretically re-enter the market if geopolitical tensions ease.

Vessel traffic through the Strait of Hormuz remains a fraction of what it was before the United States and Israel first struck Iran on February 28. Nevertheless, any indication of improving transit conditions appears to trigger lower futures prices, regardless of the scale of the improvement.

"Though still in single digits, there are also reports that the shuttling of oil across the strait has resumed. This will not be detected by tracking data, given that transponders will be turned off," ING commodity strategists wrote in a note. They also cited U.S. Energy Secretary Chris Wright, who stated that approximately 13 million barrels per day were leaving the Persian Gulf.

On the bullish side, the U.S. Strategic Petroleum Reserve (SPR) is running low, and the Department of Energy has already indicated that releases will need to cease soon. The SPR has helped moderate prices in recent months, but the end of those draws is expected to put upward pressure on prices. The reserve has been drawn down to levels last seen decades ago, limiting Washington's capacity to buffer another supply shock through emergency inventory releases.

On the bearish side, Saudi Arabia announced this week that it is seeking partners for a coalition aimed at strengthening maritime defense, with a focus on the Bab el-Mandeb Strait and the Gulf of Aden. According to Riyadh, 14 countries have officially endorsed the initiative, including Turkey, Pakistan, Egypt, Sudan, and Djibouti. The Bab el-Mandeb Strait is a separate chokepoint from Hormuz, handling shipments between the Red Sea and the Gulf of Aden, and any stabilization of its traffic could ease freight costs and improve supply chain reliability for crude moving toward European markets.

By Irina Slav for Oilprice.com