Benchmark crude prices fell in early trading, with Brent Crude dropping 71 cents, or 0.71 percent, to $99.75 per barrel. Meanwhile, West Texas Intermediate declined by 88 cents, or 0.92 percent, to $94.85 per barrel.
The 30-day license was introduced as part of efforts by the United States to stabilise global energy markets, which have been rattled by escalating tensions linked to the war involving Iran.
According to U.S. Treasury Secretary Scott Bessent, the measure is intended to provide short-term relief to markets grappling with supply disruptions.
Supply Measures Aim to Calm Markets
Analysts say the temporary waiver has helped ease some immediate concerns about tight oil supplies, although deeper geopolitical risks remain.
Yang An, an analyst at Haitong Futures, noted that while the license has reduced market anxiety, the most critical issue remains the security of global shipping routes.
“Issuing the license has eased market concerns, but it won’t resolve the most fundamental issue,” Yang said, pointing to the need for the restoration of safe navigation through the strategically important Strait of Hormuz.
The U.S. announcement followed another significant move aimed at stabilising prices. The United States Department of Energy revealed plans to release 172 million barrels of oil from the country’s Strategic Petroleum Reserve to counter soaring energy prices triggered by the conflict.
The initiative is being coordinated with the International Energy Agency, which has agreed to release a combined 400 million barrels of oil from strategic reserves among member countries.
Middle East Tensions Continue to Drive Volatility
Despite these efforts, analysts warn that the relief may be short-lived as geopolitical tensions in the Middle East continue to escalate.
Tony Sycamore, an analyst at IG Group, said that the initial market optimism following the coordinated oil release was quickly overshadowed by renewed risks in the region.
On Thursday, oil prices surged more than nine percent, reaching their highest levels since August 2022 amid mounting fears of supply disruptions.
Adding to the uncertainty, Iran’s newly installed supreme leader, Mojtaba Khamenei, declared that the country would continue its confrontation and maintain pressure by keeping the Strait of Hormuz closed as leverage against the United States and Israel.
Shipping and Energy Infrastructure Under Threat
Security concerns intensified after Iraqi officials reported that two fuel tankers in the country’s waters were struck by explosive-laden Iranian boats, forcing a halt in operations at several oil ports in Iraq.
Meanwhile, Oman reportedly moved vessels away from its key oil export terminal at Mina Al Fahal near the Strait of Hormuz as a precautionary measure.
To mitigate the growing risks, Washington is considering additional security steps. Bessent said the United States Navy could escort vessels through the Strait of Hormuz, potentially alongside an international coalition, when conditions permit.
Alternative Routes and Strategic Moves
Oil producers are also exploring alternative transport routes. Saudi Arabia is reportedly paying a premium to reroute tankers to the Red Sea using its East-West pipeline to maintain exports to global markets.
At the same time, analysts say Iran appears to be selectively allowing limited shipments through the strait. According to Sycamore, one or two tankers per day—mostly carrying oil to China—are being permitted passage, ensuring a continued flow of revenue while maintaining diplomatic leverage.
The situation has left energy markets on edge, with traders closely watching developments in the Gulf region as the risk of further disruptions continues to influence global oil prices.