Oil Prices Steady Amid Choppy Hormuz Flows, Heading for Weekly Losses
Oil prices remained steady on Friday but were on track for a significant weekly decline. Brent crude futures were down 4 cents at $89.66 a barrel, while US West Texas Intermediate (WTI) crude fell 32 cents, or 0.38%, to $83.21 a barrel. Both benchmarks are set to close the week lower, with Brent down 5.1% and WTI declining 4.5%.
Suvro Sarkar, head of energy research at DBS Bank, noted that a shift in US tactics from military pressure to economic sanctions, along with discussions about a joint corridor between Oman and Iran, has led to a decrease in risk premiums. Earlier this week, the US announced what it termed the “toughest sanctions in history” against Iran, which Tehran condemned as an “inhumane and hostile act” that has lost its effectiveness.
Hormuz traffic remains uneven
The Strait of Hormuz, a critical passage for approximately 20% of the world’s oil supply, has experienced a tentative recovery in shipping, though flows remain inconsistent. Preliminary data indicated that seven commodity vessels transited the waterway on Thursday, a decrease from 17 the previous day and below the 10-day average of 15. In contrast, 17 commodity vessels passed through the Bab el-Mandeb, another key maritime chokepoint.
Goldman Sachs estimated that total Gulf exports recently stood at 15 million to 16 million barrels per day, which is about 7 million to 8 million barrels per day below pre-war levels but 5 million to 6 million barrels per day above the lowest point recorded in March. John Evans, an analyst at PVM Oil Futures, stated that various factors, including OPEC developments and China’s demand, remain interconnected with the broader 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 by Rs 49, or nearly 1%, to Rs 7,915 per barrel. The October contract decreased by Rs 56, or 0.71%, to Rs 7,797 per barrel. Analysts cited reports of a potential US role in Venezuela’s oil industry as a factor weighing on prices, as traders considered the possibility of increased output from the South American nation.
Anindya Banerjee, head of commodity and currency research at Kotak Securities, explained that Brent’s decline is linked to Washington’s shift from military to economic pressure, which has alleviated fears of a broader conflict. He also mentioned that Iran and Oman have reached a partial agreement on sharing revenue from Hormuz traffic, although a full deal remains blocked.
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