Oil prices ended the week lower, offering markets a brief respite amid easing concerns over global supply disruptions — particularly around the Strait of Hormuz. Yet despite the dip, energy traders remain on high alert, closely monitoring developments across the Middle East. The Strait of Hormuz remains a critical chokepoint in the global energy supply chain, handling roughly 20% of the world’s oil before the recent regional escalation. Although Pakistan has attempted to facilitate peace talks, no tangible progress toward de-escalation has emerged.
Brent Falls Over 5% Weekly, Stabilizing Below $90
On Friday, August 28, 2026, Brent crude settled at $88.29 per barrel — down 0.26% from the previous session and more than 5% lower on a weekly basis. This decline reflects improved flow conditions from the Persian Gulf, where oil exports have rebounded significantly since March. According to Goldman Sachs estimates, Gulf exports now stand at 15–16 million barrels per day (bpd), up from just 5–6 million bpd earlier this year. Still, volumes remain well below pre-conflict levels of 22–24 million bpd.
Strait of Hormuz Remains a Flashpoint
While flows through the Strait of Hormuz are showing signs of recovery, geopolitical uncertainty persists. Iran and Oman recently agreed on a revenue-sharing framework for the waterway — though Tehran clarified that the deal does not equate to an immediate reopening of the strait. Analysts view the agreement as a step toward gradual normalization of energy flows, but not a return to pre-crisis operational capacity.
Diplomatic Outlook Remains Dim
Prospects for near-term diplomatic breakthroughs appear limited. According to Reuters, the Trump administration has signaled to mediators that it will not revive the preliminary nuclear agreement with Iran reached in June — a deal that later collapsed. This stance curbs expectations for an imminent resolution, sustaining a meaningful geopolitical risk premium in oil markets.
Ukraine Conflict Adds Another Layer of Uncertainty
Meanwhile, developments in Ukraine continue to weigh on sentiment. Recent attacks on Russian energy infrastructure introduce another variable of supply-side uncertainty — especially for refined products and associated logistics. Still, the uptick in Gulf exports has so far helped keep benchmark prices anchored below the $90-per-barrel threshold.
Monetary Policy Pressures Mount
Adding further complexity, Federal Reserve Chair Kevin Warsh’s recent remarks emphasized persistent inflationary pressures and the potential for higher interest rates. Such signals contributed to broader financial market volatility and added downward pressure on oil — reflecting how macroeconomic policy continues to shape commodity valuations alongside geopolitical drivers.