Oil prices inched down on Friday and were headed for a second weekly decline as a continued US blockade of Iran eased fears of renewed fighting in the Middle East, though shipping attacks remained a supply risk.
Brent futures fell 28 cents, or 0.29%, to $95.54 a barrel at 0527 GMT. US West Texas Intermediate (WTI) futures declined by 56 cents, or 0.63%, to $88.18 a barrel.
Friday’s declines reversed two days of gains amid a volatile trading week, with earlier hopes for a rapprochement in the US-Israel war against Iran, now in its ninth month, offset by strikes on Saudi Arabian infrastructure by Yemen’s Iran-backed Houthis and attacks on tankers shipping crude out of the Gulf.
US President Donald Trump said on Truth Social a deal with Iran was not necessary to end the war.
“Trump’s indications that further military escalation against Iran may not be necessary have raised expectations that Washington could increasingly rely on economic sanctions and restrictions on oil shipments rather than intensifying military operations,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
The weakness in oil prices is also largely driven by signs of softening US demand, as rising crude oil and fuel inventories indicate a relatively subdued consumption outlook, Sachdeva said.
US crude and fuel inventories rose last week, driven by softer refined products demand and a jump in oil imports, the Energy Information Administration said on Thursday.
Brent is set for a 2.9% drop this week, after plunging 16% the previous week, while WTI is set for a 2.9% decline, after dropping 13% previously.
Despite the easing prices, risks remain for oil shipments out of the Strait of Hormuz, the key waterway for crude exports from the main Middle East producers.
On Thursday, Iran’s military said four oil tankers were hit by explosions in the Strait of Hormuz after ignoring warnings. Reuters could not immediately verify the Iranian accounts.
That same day, Yemen’s Iran-aligned Houthis said they had attacked a pumping station on the Saudi East-West oil pipeline, an oil facility in the Saudi Red Sea city of Yanbu, and an Aramco building in the capital Riyadh.
“Geopolitical risks remain elevated, and any fresh disruption to oil supplies could quickly reignite upward pressure on prices,” Sachdeva of SS WealthStreet said.
(Reporting by Helen Clark; Editing by Christian Schmollinger and Sonali Paul)