Brent crude retreats after briefly topping $100 a barrel

Brent crude fell sharply on Friday after briefly breaching $100 per barrel the previous session for the first time since May, as concerns over weakening Chinese demand and the prospect of additional OPEC+ supply increases outweighed geopolitical supply risks stemming from Houthi attacks on Saudi oil tankers in the Red Sea.

The international benchmark was trading around $98 on Friday morning, down from Thursday's peak above $100, reversing much of the gains triggered by the Iran-backed Houthi rebels' claim that they struck two Saudi oil tankers in the Red Sea with drones and missiles on Thursday.barchart+5

Geopolitical Risk Meets Demand Reality

Thursday's rally came after the Houthi attacks threatened to widen the U.S.-Iran conflict and disrupt another critical shipping route for global oil flows. The U.S. military simultaneously carried out a twelfth consecutive night of strikes against Iran. But the surge proved short-lived as traders refocused on weak underlying fundamentals.facebook+3

China's refinery run rates plummeted to a ten-year low in June due to weak domestic demand and export curbs on refined products, according to Reuters ↗ 5.20%. Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.26% noted that China's crude import demand was down roughly 5 million barrels per day year-over-year, while the International Energy Agency reported global oil demand in May fell 5.3 million barrels per day from a year earlier, with China accounting for the largest single decline.fortune+2

OPEC+ Supply and Diplomatic Pressures

Adding to the bearish case, OPEC+ approved its fifth consecutive monthly production increase in early July, agreeing to raise output by 188,000 barrels per day from August. Analysts have noted that continued OPEC+ production growth, combined with sluggish global demand, is likely to cap further price gains even as geopolitical tensions periodically push crude higher.aljazeera+2

Diplomatic developments have also weighed on prices in recent weeks. While U.S.-Iran tensions remain elevated, the broader trajectory of peace talks — including Qatar-mediated indirect negotiations and a framework for a final deal within 60 days announced in June — has encouraged institutional investors to pare geopolitical risk premiums. Goldman Sachs expects the geopolitical risk premium to continue fading over time.english.news+1

Structural Headwinds Persist

The selloff reflects a market increasingly pulled between competing forces. On one side, the ongoing U.S.-Iran conflict and Houthi disruptions in the Red Sea threaten supply corridors. On the other, China's accelerating shift toward electric vehicles continues to erode gasoline demand, while OPEC+ has signaled its intent to reclaim market share through steady production increases. J.P. Morgan JPMorgan Chase & Co. ↗ 0.95% has forecast Brent to average $86 per barrel in the third quarter and $80 in the fourth, suggesting that Friday's retreat may signal the market's broader direction absent a further escalation in hostilities.kpler+1