LONDON: Oil prices slipped on Friday and were headed for their first weekly decline in three weeks as markets weighed ongoing tensions between the United States and Iran against signs of improving crude flows through the Strait of Hormuz.
Brent crude futures fell 60 cents, or 0.67%, to $89.10 a barrel, while US West Texas Intermediate (WTI) crude dropped 64 cents, or 0.77%, to $82.89.
Despite Thursday’s gains, Brent was on course to lose around 5.3% for the week, while WTI was down about 4.3%, ending a two-week run of gains.
Market analysts said oil supplies through the Strait of Hormuz appeared to be recovering despite the unresolved conflict and stalled diplomatic efforts.
“Despite diplomatic efforts hitting a roadblock, there are growing signs of additional oil flowing through the Strait of Hormuz,” ING analysts said, noting that producers were increasingly adapting to the conditions surrounding the strategic waterway.
Goldman Sachs estimated that Gulf oil exports had recently reached between 15 million and 16 million barrels per day (bpd). While that remains 7 million to 8 million bpd below pre-war levels, it represents a significant recovery from the lowest point recorded in March.
Diplomacy Faces Fresh Setback
Oil markets were also influenced by reports that the Trump administration is not seeking to restore the terms of an earlier agreement with Tehran.
According to a Wall Street Journal report citing people familiar with the matter, US officials have repeatedly told mediators that Washington does not want to revive the June memorandum of understanding, complicating efforts to bring the two sides back to negotiations.
Washington said on Thursday that it was not currently holding talks with Iran, despite diplomatic initiatives by other countries aimed at reopening dialogue.
The United States earlier this week announced what it described as its “toughest sanctions in history” against Iran. Tehran rejected the measures as an “inhumane and hostile act”, arguing that US sanctions had already lost their effectiveness.
Broader Geopolitical Risks
Elsewhere, tensions between Russia and the West also added to geopolitical uncertainty. Moscow warned that it could target British military facilities inside and outside Ukraine in response to Ukrainian attacks on Russian territory using British-supplied long-range missiles.
US President Donald Trump, however, said Russian President Vladimir Putin would not attack a NATO member and played down reports that CIA Director John Ratcliffe had warned Russian officials against such a move.
The developments added another layer of geopolitical risk to already volatile global energy markets.
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