Oil Prices Fall Again as Markets Process Saudi Maritime Coalition Plans
Global oil prices weakened again during Friday morning trading (31/7/2026), extending a correction following a sharp surge driven by escalating conflict in the Middle East. Market participants are currently weighing the possibility of reduced disruptions to shipping routes following a proposal to form a maritime defence coalition led by Saudi Arabia.
According to Refinitiv data as of 09:20 WIB, Brent crude stood at US$88 per barrel, down 1.16% from Thursday’s close of US$89.03 per barrel. West Texas Intermediate (WTI) was at US$81.84 per barrel, a 2.09% decline from its previous close of US$83.59 per barrel.
This correction extends the decline seen the previous day. On Thursday’s close (30/7), Brent fell 1.88% to US$89.03 per barrel, while WTI corrected 1.03% to US$83.59 per barrel. Nevertheless, oil prices remain well above levels seen at the start of last week. Brent is still approximately 9.9% higher than the July 21 close of US$91.01 per barrel, while WTI has strengthened by about 8.2% from US$84.91 per barrel.
Downward pressure on prices emerged after Saudi Arabia proposed the formation of a multinational maritime defence coalition to bolster security in the Bab el-Mandeb Strait, the Red Sea, and the Gulf of Aden. The Saudi Ministry of Defence stated that 14 nations, including Turkey, Pakistan, Egypt, Sudan, and Djibouti, have expressed support for the initiative.
The market views this move as having the potential to reduce the risk of oil distribution disruptions in the Red Sea. Last week, the Iran-backed Houthi group announced a maritime blockade against Saudi Arabia, threatening oil export routes through the Red Sea, which serves as a vital alternative when traffic through the Strait of Hormuz is disrupted.
Further sentiment stems from negotiations between Iran and Oman regarding the management of the Strait of Hormuz. Although a senior Iranian official stated the previous day that Oman’s proposal for joint management was rejected, the continuation of dialogue is still viewed by the market as an opportunity to reopen shipping lanes more safely. The Strait of Hormuz handles approximately one-fifth of global oil and liquefied natural gas trade, meaning any diplomatic developments directly impact energy price movements.
On the other hand, geopolitical risk premiums have not vanished. The United States confirmed it had struck dozens of targets belonging to Iran’s Islamic Revolutionary Guard Corps (IRGC) in retaliation for Tehran’s ballistic missile launch against US bases in the Middle East. Washington also denied Iranian claims that six US fighter jets were destroyed during the attack.
Conflict is also disrupting energy infrastructure in several regions. Drone attacks triggered fires on two gas tankers at the Port of Damietta, Egypt. The Egyptian government has ensured that its energy needs can still be met through alternative supplies. Simultaneously, the Houthis reportedly launched attacks against oil facilities in the Eastern Province of Saudi Arabia from Iraqi territory, alongside Iraqi armed groups.
Supply disruptions are also occurring in the Black Sea region. Several tankers scheduled to load oil at the Caspian Pipeline Consortium (CPC) terminal cancelled loading processes after a vessel was hit by an attack while berthed. In Russia, Ukrainian drone strikes triggered a fire at Lukoil’s Perm refinery, forcing one crude oil distillation unit to halt operations.
Despite ongoing supply disruptions, market participants are beginning to see opportunities for additional supply if security in shipping lanes improves. This prospect is limiting the upward momentum of oil, which had previously seen Brent touch US$93.31 per barrel and WTI reach US$85.94 per barrel during Thursday’s trading before ultimately closing lower.