Oil prices edged higher today but were set for a second weekly decline in a row as Washington’s focus on blockading Iran and ramping up other economic pressures allayed fears of renewed direct conflict, although attacks on shipping continued to pose a supply risk.
Brent futures rose85 cents, or 0.9%, to $96.67 a barrel this afternoon, while US West Texas Intermediate futures were up 44 cents, or 0.5%, to $89.18 a barrel.
For the week, Brent and WTI were both on track for a drop of around 2%. The benchmarks fell 16% and 13%, respectively, last week.
Oil has had a volatile trading week with earlier hopes for a rapprochement in the US-Israeli war on 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 yesterday.
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.
Iran’s military yesterday 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.
