ISLAMABAD: Global oil prices fell on Friday as markets remained focused on developments surrounding Iran and the flow of crude through the Strait of Hormuz, with both major benchmarks heading towards weekly declines.
Brent crude futures dropped 60 cents, or 0.67%, to $89.10 a barrel, while US West Texas Intermediate (WTI) declined 64 cents, or 0.77%, to $82.89.
The fall puts Brent on course for a 5.3% weekly decline and WTI for a 4.3% loss, potentially ending two consecutive weeks of gains.
Market sentiment remained cautious despite a rise in oil prices during the previous session following reports that US President Donald Trump was unwilling to return to earlier terms of a proposed agreement with Iran. The uncertainty has added another layer of risk to an already volatile energy market.
Analysts at ING said there were indications that more oil was moving through the Strait of Hormuz despite continuing diplomatic difficulties. Producers, they noted, appeared to be adjusting to the prolonged disruption and becoming more accustomed to operating through the strategic waterway.
Goldman Sachs estimated that Gulf oil exports had recently reached between 15 million and 16 million barrels per day. While the figure remains 7 million to 8 million barrels per day below pre-conflict levels, it represents a recovery of around 5 million to 6 million barrels per day from the lowest levels recorded in March.
Diplomatic efforts have faced further complications after reports indicated that the Trump administration had informed mediators that it was not interested in reviving an earlier memorandum of understanding with Tehran. Washington also said on Thursday that it was not directly negotiating with Iran, despite attempts by other countries to bring the two sides back to the negotiating table.
Tensions intensified after the United States announced what it described as its toughest-ever sanctions on Iran. Tehran rejected the measures as hostile and inhumane, while maintaining that the sanctions had become ineffective.
Oil markets are also monitoring wider geopolitical risks. Moscow warned that it could target British military interests in response to Ukrainian strikes on Russian territory involving long-range missiles supplied by Britain.
US President Trump, however, said Russian President Vladimir Putin would not attack a NATO member and dismissed reports that CIA Director John Ratcliffe had issued warnings to Russian officials over a possible attack.
With geopolitical tensions continuing across multiple regions, traders are closely watching crude supply flows and diplomatic developments for signals that could influence oil prices in the coming sessions.
