• Oil futures fell to session lows, with Brent down about 4.7% and WTI around 5.4%, amid broad selling.
  • Mixed demand cues and evolving Middle East supply risks are driving volatility.
  • Market focus remains on OPEC+ decisions, geopolitical tensions, and economic data.

Oil Prices Plunge

Oil prices extended losses on Friday, hitting session lows as risk-off sentiment gripped the market. Brent crude fell 4.7% to trade near $XX per barrel, while West Texas Intermediate dropped 5.4% to around $XX, according to data compiled by Bloomberg. The declines were driven by broad fund and speculative selling, as traders weighed mixed demand signals against potential supply disruptions.

"The market is caught between fears of a global slowdown and the risk of supply interruptions in the Middle East," said Sarah Johnson, an energy analyst at XYZ Capital. "Yesterday's data showing weaker-than-expected economic activity in major economies has reignited demand concerns, while any news regarding the Strait of Hormuz keeps a floor under prices."

Geopolitical Tensions and Supply Concerns

The price slide comes amid evolving geopolitical risk in the Middle East, particularly around the Strait of Hormuz, a crucial chokepoint for oil shipments. While there have been no recent disruptions, market participants remain wary of potential escalations. "Any threat to shipping through Hormuz immediately jacks up the risk premium," noted Michael Chen, a portfolio manager at ABC Asset Management.

Meanwhile, supply expectations are also in focus, with OPEC+ scheduled to meet next month. Traders are watching for any signals on production adjustments, as the group has been gradually unwinding its output cuts. "If OPEC+ signals a faster return of barrels, that could further pressure prices," Johnson added.

Demand and Macro Factors Weigh

Short-term sentiment has been dampened by concerns over global growth and inflation, which could curb oil demand. Recent data from China, the world's largest importer, showed slower industrial activity, while the Federal Reserve's hawkish stance has strengthened the dollar, making oil more expensive for holders of other currencies. "The macro picture is not supportive right now," Chen said. "Without clearer evidence of demand resilience, the downside risks remain."

Looking ahead, the market will closely monitor economic indicators, including jobs data and PMI releases, for clues on the health of the global economy. Additionally, any developments in the Middle East, particularly involving Iran or regional proxies, could trigger sharp price swings.

Market Sentiment and Volatility

As of mid-morning trading, both Brent and WTI were trading near their session lows, with trading volumes higher than average. The market's risk-on/off seesaw reflects the uncertainty that has characterized oil trading this year. "Volatility is likely to remain elevated," Johnson said. "Traders are on edge, and any headline can move prices by several dollars."

This article was updated to include the latest price levels as of 10:30 a.m. EST. Earlier data showed Brent down 4.2% and WTI down 4.8%.