Oil Prices Drop Sharply as Supply Concerns Ease

Oil prices fell sharply in Friday morning trading, with West Texas Intermediate (WTI) crude down $2.13 to $92.48 per barrel, a drop of 2.25%. Brent crude declined $1.87 to $98.35, according to live price data. The price for Bakken crude at the wellhead was trading at a discount of $3.42 below the WTI benchmark.

The drop follows a session of gains on Thursday, where prices rose on signals of tight global supply, according to Rigzone. That earlier strength was countered by optimism over a potential U.S.-Iran deal to reopen the Strait of Hormuz, a critical global oil transit chokepoint, the outlet reported.

Adding downward pressure on prices was fresh U.S. inventory data. The U.S. Energy Information Administration's latest weekly report showed commercial crude oil stocks, excluding the Strategic Petroleum Reserve, rose to 426.39 million barrels for the week ending September 18, Rigzone reported. An increase in inventories typically suggests weaker immediate demand or higher supply, weighing on prices.

For Bakken operators, the morning's price action presents a mixed picture. While the absolute price for WTI remains above $90, the significant daily decline and the persistent discount for Bakken crude directly impact wellhead revenue. The current Bakken differential of -$3.42 means local producers are effectively receiving approximately $89.06 per barrel.

The volatility highlights the competing market forces at play: structural tightness in physical crude supply versus shifting geopolitical risks and inventory builds. The potential reopening of the Strait of Hormuz could ease global supply fears that have supported prices for weeks.

The price drop may prompt a reassessment of near-term hedging strategies among North Dakota producers. Operators budgeting based on sustained $90-plus WTI will be watching to see if this is a brief correction or the start of a deeper pullback.

Natural gas prices also moved lower, down $0.13 to $3.24 per MMBtu. Lower gas prices can affect the economics of associated gas production from Bakken oil wells, though oil remains the primary revenue driver for the basin.

Market attention will now turn to weekly rig count data and any further developments on the Iran negotiations. For royalty owners and operators, the focus remains on the net Bakken price, which has narrowed significantly from the morning's wider crude losses but remains below the key WTI benchmark.