Oil prices were largely steady on Friday but remained on track for a sharp weekly decline as traders weighed stalled US-Iran diplomatic talks against a tentative and uneven recovery in crude flows through the Strait of Hormuz.Brent crude futures were down 4 cents at $89.66 a barrel at 0943 GMT, while US West Texas Intermediate (WTI) crude fell 32 cents, or 0.38%, to $83.21 a barrel.Both benchmarks were set to end the week lower, with Brent down 5.1% and WTI declining 4.5%.“A combination of US tactics moving to economic sanctions rather than military pressure and talks of Oman-Iran’s joint corridor have led to risk premiums declining,” Suvro Sarkar, head of energy research at DBS Bank, told Reuters.The US announced what it called the “toughest sanctions in history” on Iran earlier this week. Tehran described the sanctions as an “inhumane and hostile act” that had lost their effectiveness.
Hormuz traffic remains uneven
The Strait of Hormuz, through which around 20% of the world’s oil supply moves, has seen a tentative recovery in shipping, although flows remain uneven.Preliminary shipping data showed that seven commodity vessels transited the waterway on Thursday, down from 17 a day earlier and below the 10-day average of 15, Reuters reported.At the Bab el-Mandeb, another major maritime chokepoint, 17 commodity vessels passed through, with six entering and 11 exiting.Goldman Sachs estimated that total Gulf exports recently stood at 15 million to 16 million barrels per day, around 7 million to 8 million bpd below pre-war levels but 5 million to 6 million bpd above the lowest point recorded in March.“We are of the attitude of being prepared for everything but predicting nothing,” PVM Oil Futures analyst John Evans said, adding that several factors, including OPEC developments and China’s demand, remained linked to the wider conflict.
MCX crude slips nearly 1%
In India, crude oil futures also traded lower on Friday. Crude futures for September delivery on the Multi Commodity Exchange (MCX) fell Rs 49, or nearly 1%, to Rs 7,915 per barrel.The October contract declined Rs 56, or 0.71%, to Rs 7,797 per barrel.Analysts cited by news agency PTI said that reports of a possible US role in Venezuela’s oil industry weighed on prices as traders assessed the possibility of increased output from the South American producer.Anindya Banerjee, head of commodity and currency research at Kotak Securities, said Brent was trading lower as Washington’s shift from military to economic pressure had reduced fears of a wider war.He added that Iran and Oman had reached a partial arrangement on sharing revenue from Hormuz traffic, although Tehran has said a full deal remains blocked.“The easing in prices reflects a market moving away from extreme conditions, although the underlying supply remains tight,” Banerjee said.
