Oil Prices Slip but Remain on Track for 8% Weekly Gain Amid Middle East Tensions
Crude prices fell on Friday but are set for an over‑8% weekly rise as shipping attacks and diplomatic talks over the Strait of Hormuz keep market volatility high.
Share
Desk Analysis
How This Affects the Exchange
Sector Effect
Positive · Buy bias
Oil & Gas sector likely to benefit from higher crude prices – Buy bias on OGDC, PPL.
Sectors & Direction
Desk read
Desk call: Buy bias · Positively affected
- Oil & GasPositively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas — Positive · Buy bias. PSX tickers: OGDC, PPL. Oil & Gas sector likely to benefit from higher crude prices – Buy bias on OGDC, PPL.
Full Story
Open on Business Recorder## Market Overview
Oil benchmarks dropped on Friday, with Brent settling at $104.61 a barrel (‑2.81%) and U.S. WTI at $100.05 a barrel (‑2.37%). Despite the pull‑back, both indices are still on course for a weekly increase of more than 8%, driven by ongoing geopolitical risk in the Gulf.
## Geopolitical Drivers
The price dip followed reports that foreign ministers in the Middle East are negotiating a temporary arrangement with Iran to manage shipping through the Strait of Hormuz. Earlier in the week, heightened attacks on vessels in the region had pushed Brent and WTI up more than 6%.
## Supply Disruptions
Satellite images showed smoke near Saudi Arabia’s East‑West Pipeline, suggesting damage to a key pumping station that diverts Saudi crude away from Hormuz. The International Energy Agency noted Saudi crude output fell to 6 million bpd in August – the lowest in over three decades – after attacks on energy facilities.
## Shipping Constraints
Yemen’s Houthis reached Perim Island in the Bab el‑Mandeb Strait, threatening another vital chokepoint. Iran claimed to have attacked ten ships near Hormuz, while U.S. actions targeted five Iranian tankers. Vessel transits through Hormuz fell from 11 to 7 in one day, underscoring the tightening of oil flow routes.
## Refined Product Impact
U.S. diesel prices breached $6 per gallon for the first time, reflecting a “one‑two punch” from Gulf shipping constraints and Ukrainian attacks on Russian refineries. Analysts expect diesel and other refined products to retain upside potential even if crude prices soften.
## Outlook
Commerzbank lifted its year‑end Brent forecast to $85 a barrel (from $75) and raised diesel and jet‑fuel price expectations, signalling confidence that supply pressures will keep oil markets bullish.
## Implications for Pakistan
Higher global oil prices support the earnings outlook for Pakistan’s listed oil and gas companies, particularly those with export contracts or exposure to international crude pricing. The continued volatility also raises concerns for the broader economy, including inflationary pressure on transport and energy costs.