Global crude oil prices fell sharply on Friday and were on track to post steep weekly losses as easing supply concerns in the Strait of Hormuz outweighed fresh geopolitical tensions following an attack on a cargo vessel near Oman.

International oil benchmark Brent crude futures fell $1.51 or 2 per cent, to $73.75 a barrel in early trade.

Similarly, US West Texas Intermediate (WTI) crude declined $1.50 or about 2 per cent to $70.42 a barrel.

Both benchmark contracts had gained more than 2 per cent in the previous session after a cargo vessel was struck by an unidentified projectile near Oman, prompting the United Nations' shipping agency to suspend its voluntary evacuation programme.

According to media reports, two US officials said Iran had fired on the cargo vessel as it attempted to transit the Strait of Hormuz. Iranian authorities, however, said the security of ships sailing outside designated Hormuz routes could not be guaranteed.

Despite the latest security concerns, Brent and WTI were both headed for weekly losses of nearly 7 per cent as fears of supply disruptions eased following an improvement in tanker traffic through the Strait of Hormuz.

Crude shipments through the strategic waterway rose this week to their highest level since the US-Israel conflict with Iran began in February, after a ceasefire helped reopen the route. However, overall vessel traffic remained well below the pre-conflict average of around 125 ships per day.

The Indian basket of crude oil -- a weighted average of Brent Dated, Oman and Dubai crude grades imported by domestic refiners -- averaged $86.31 per barrel in June so far, after surging during the West Asia conflict. The basket had averaged $106.23 per barrel in May and $114.48 per barrel in April.

Global benchmark Brent crude, which had touched around $120 per barrel at the peak of the conflict, is now hovering near $74 per barrel.