OIL prices held near US$81 a barrel on Friday as investors adopted a wait-and-see stance over diplomatic efforts to reopen the Strait of Hormuz, while continued crude shipments through the strategic waterway offered some relief to increasingly strained global markets.
Brent crude traded near US$87 a barrel after declining in the previous session, with traders balancing persistent geopolitical risks against signs that oil demand is weakening as the conflict drags on and energy costs remain elevated.
Despite the continuing impasse over Hormuz, crude is still flowing from the Persian Gulf, although some tankers are reportedly sailing with their transponders switched off as operators seek to navigate heightened security risks.
Vessels passing through the Strait of Hormuz remain exposed to threats, while the United States has claimed that as much as nine million barrels of crude oil a day is currently moving through the waterway.
The capacity of US forces to escort tankers through the strategic passage is also expanding, potentially providing additional support for energy flows if security conditions deteriorate further.
The Strait of Hormuz remains critical to global energy markets, making any prolonged disruption a major threat to supply, prices and economic growth.
Demand outlook weakens
The supply risks are being compounded by growing concerns over demand.
The International Energy Agency cut its global oil demand outlook this week, warning that prolonged conflict and elevated prices were increasingly weighing on consumption.
The Organisation of the Petroleum Exporting Countries also lowered its forecast for global oil demand growth in 2026 to 580,000 barrels per day, marking its fourth consecutive downward revision.
The weaker demand outlook has helped prevent oil prices from rising further despite continuing geopolitical risks, as traders weigh the possibility that prolonged disruption could simultaneously constrain supply and weaken economic activity.
Dollar steadies as Fed hike bets ease
In currency markets, the US dollar was broadly mixed on Thursday after data showed US producer prices were unchanged in July, prompting traders to further reduce expectations of a Federal Reserve interest-rate increase in September.
The flat reading in the Producer Price Index for final demand followed a revised 0.1 per cent decline in June. Economists polled by Reuters had expected producer prices to rebound by 0.2 per cent.
The data came a day after consumer price figures showed that US consumer prices had barely increased last month, strengthening expectations that inflationary pressures may be moderating.
Noel Dixon, senior macro strategist at State Street, said components of Thursday's producer-price report that feed into the personal consumption expenditures data due later this month appeared encouraging.
"My takeaway from that number and yesterday's number is that it helps to make the case for the Fed staying on hold in September," Dixon said.
Fed funds futures showed a 35 per cent probability of a September rate hike, down from 40 per cent on Wednesday and 55 per cent a week earlier.
The dollar index, which measures the greenback against a basket of currencies including the yen and euro, rose 0.02 per cent to 99.96 after earlier falling to 99.80 following the release of the producer-price data.
The euro gained 0.03 per cent to US$1.1528.
Traders are continuing to assess whether the Federal Reserve will need to raise interest rates as inflation remains above its 2 per cent target and oil prices remain elevated because of disruptions linked to the conflict around the Strait of Hormuz.
Markets were pricing about a 65 per cent probability that the Fed would leave interest rates unchanged at its September 15-16 meeting.
The latest inflation data suggest that the initial price pressures from the Middle East conflict and higher energy costs may be easing, although renewed regional tensions continue to pose a significant risk to the inflation outlook.
Meanwhile, weekly US jobless claims increased but remained historically low, while recent employment data indicated that the labour market may have been weaker than previously estimated.
With oil prices still elevated and the outlook for global demand deteriorating, investors are now closely watching developments around the Strait of Hormuz and the direction of US monetary policy for signals on the next major move across global markets. - August 14, 2026
