Brent ended the week near $76 a barrel as hopes of smoother shipping tempered geopolitical fears, yet volatile energy costs continue to threaten inflation, trade balances and economic growth across Asia.
SINGAPORE — Crude-oil prices edged lower at the end of the trading week as investors grew more optimistic that shipping through the Strait of Hormuz could gradually normalise, offering limited relief to Asia’s major energy-importing economies after months of severe market disruption.
Brent crude futures settled at $76.01 a barrel on Friday, July 10, falling 29 cents, while US West Texas Intermediate closed at $71.41 a barrel, down 67 cents. Despite the daily decline, Brent gained approximately 5.5% over the week and WTI rose nearly 4%, reflecting persistent concern that renewed fighting between the United States and Iran could once again interrupt supplies from the Persian Gulf.
The conflicting price signals underline the uncertainty surrounding the international oil market. Traders are balancing expectations of recovering supply against the continuing risk of attacks on tankers, military escalation and delays affecting one of the world’s most important energy corridors.
The Strait of Hormuz has traditionally carried about one-fifth of global oil and gas supplies. Any prolonged disruption would have particularly serious consequences for Asia, where several of the world’s largest economies depend heavily on imported crude from the Middle East.
China, India, Japan and South Korea are among the region’s biggest oil buyers. Higher crude prices increase their import bills, place pressure on national currencies and raise costs for manufacturers, airlines, transport companies and consumers. For governments attempting to stimulate domestic demand, another sustained energy-price shock could make that task considerably more difficult.
The International Energy Agency said benchmark crude prices had fallen sharply during June as an interim US-Iran ceasefire supported a recovery in oil flows through the strait. North Sea Dated crude dropped by approximately $31 a barrel over the course of the month, reaching about $68 in early July—its lowest level since January and below its pre-war price.
That decline demonstrates how rapidly the geopolitical premium attached to oil can disappear when supply conditions improve. However, recent military developments have again introduced volatility, preventing prices from settling into a clear downward trend.
The economic effects are also becoming increasingly complicated because crude-oil prices do not fully reflect the pressures facing consumers. Global refining constraints and shortages of diesel and gasoline have pushed fuel costs higher even when benchmark crude prices have remained comparatively stable.
European diesel refining margins recently climbed above $60 a barrel, while gasoline traded at a premium of roughly $41 a barrel to crude—levels associated with an increasingly severe shortage of refining capacity. The squeeze has been intensified by refinery disruptions and Russia’s decision to restrict diesel exports.
Similar pressures may affect Asia, where industries ranging from shipping and construction to agriculture and mining depend heavily on diesel. Elevated fuel prices can spread rapidly through an economy by increasing freight charges, food-production expenses and the cost of moving goods between factories, ports and consumers.
For central banks, the situation creates another difficult policy calculation. A sustained rise in energy prices could revive inflation and delay interest-rate cuts. Yet maintaining restrictive monetary policy would also place additional pressure on businesses and households already confronting weak demand and expensive credit.
Oil-importing countries with limited fiscal space face an especially difficult choice. Governments may attempt to shield consumers through fuel subsidies or tax reductions, but such measures can widen budget deficits and weaken public finances. Allowing market prices to rise, meanwhile, risks damaging consumer confidence and provoking political opposition.
The longer-term outlook remains highly uncertain. The US Energy Information Administration expects Brent crude to decline from an average of $103 a barrel in the second quarter of 2026 to approximately $70 in the fourth quarter as supply conditions improve. It forecasts an average price of about $65 in 2027, although continued geopolitical instability could quickly undermine that projection.
Eni chief executive Claudio Descalzi has warned that oil could move beyond its current range of roughly $80 to $100 a barrel by early 2027 should the Middle East conflict persist. Such an increase would strengthen inflationary pressures and weaken global energy demand.
For Asia, the latest decline in crude prices therefore represents reassurance rather than resolution. The region’s economic prospects remain closely tied to events in the Persian Gulf, where a single escalation could rapidly push oil higher, increase import costs and complicate efforts to sustain growth.
Markets may currently be betting on a gradual restoration of supply. Governments and businesses, however, have little reason to assume that the era of extreme oil-price volatility has ended.
