Brent slips to $87.59 but holds a 20% monthly gain on supply risk

Brent crude dropped $1.44, or 1.6%, to $87.59 a barrel by 0658 GMT on Friday, with US West Texas Intermediate (WTI) down $1.59, or 1.9%, at $82. The daily fall does not change the wider picture: both benchmarks remain on track for a monthly gain of roughly 20%. Prices have softened from recent highs, but the trend is still up.

The easing reflects supply moving despite the geopolitical backdrop. Daniel Hynes, a senior commodity analyst at ANZ, said escalating Middle East tension is being offset by signs of higher flows through the Strait of Hormuz, which normally carries about 20% of global crude and liquefied natural gas (LNG) shipments. The strait has been the focal point for oil since the US-Israeli conflict with Iran began on 28 February. The Guardian reported that a pause in US strikes on Iran helped calm the immediate supply fear.

The chart below shows Brent over recent months, against which the daily dip and the wider 20% monthly climb can both be read.

What this means for UK buyers

Brent does not price your gas or power directly, but it sets the tone for the risk premium feeding into UK forward curves. A 20% monthly rise in crude tends to pull gas-linked contracts higher over time, so the daily dip is less relevant to your renewal than the sustained upward drift. If you are timing a fixed contract, the direction of travel matters more than one session's move.

Watch these pressure points shaping the premium:

• Strait of Hormuz flows (around 20% of global crude and LNG)
• Red Sea and Bab el-Mandeb transit under Houthi blockade threat
• Freight rates and marine insurance premiums, both rising
• The Saudi-led maritime coalition backed by 14 states
• Any concrete outcome from US-Iran discussions

Reuters reported that Iran-aligned Houthi militants in Yemen declared a naval blockade against Saudi Arabia last week, threatening the Red Sea route that serves as an alternative to Hormuz. Tanker traffic continues through both corridors, but higher security risk has lifted freight costs and insurance premiums. Priyanka Sachdeva, an analyst at Phillip Nova, said a significant geopolitical risk premium is now built into prices, adding that 'though prices have softened from recent highs, the overall trend remains positive'.

Saudi Arabia is leading a multinational defence coalition covering Bab el-Mandeb, the Red Sea, and the Gulf of Aden, with support from Djibouti, Egypt, Pakistan, Sudan, and Turkey among others. Whether that stabilises freight costs will shape how much premium stays in the curve.

Watch the next round of US-Iran talks and any change in Hormuz transit volumes: a clean supply signal could unwind part of the 20% monthly gain, while a fresh disruption would push it the other way.