Oil prices fell about 2% on Friday and were on course for their steepest weekly decline in months as concerns over supply disruptions eased following the resumption of crude shipments through the Strait of Hormuz, despite a fresh security incident near Oman.
Brent crude dropped US$1.47, or 1.95%, to US$73.79 a barrel while US West Texas Intermediate (WTI) fell US$1.44, or 2%, to US$70.48. Both benchmarks are heading for weekly losses of around 8%.
Market sentiment improved after Saudi Aramco resumed crude loadings at its Ras Tanura terminal following a nearly four month suspension. Shipping data showed two very large crude carriers loading oil while another awaited its turn, with each vessel capable of carrying two million barrels.
June Goh, senior oil market analyst at Sparta Commodities, said the market was reacting to increased crude flows leaving the Strait of Hormuz as well as weaker demand from China.
The decline came a day after oil prices rose more than 2% when a cargo vessel was struck by an unidentified projectile near Oman, prompting the United Nations shipping agency to suspend its voluntary evacuation programme. Two US officials told Reuters Iran had fired on the vessel as it attempted to transit the strait, while Iranian authorities warned that ships travelling outside designated Hormuz routes could not be guaranteed security.
Data also showed crude shipments through the Strait of Hormuz reached their highest level since fighting involving Iran began in February after the ceasefire reopened the vital waterway. However, analysts at ING noted that much of the increase reflected previously stranded tankers leaving the Gulf, with inbound traffic still well below normal levels.
Meanwhile, earthquakes in Venezuela added another layer of uncertainty. Initial assessments indicated limited damage to the country’s oil infrastructure, although power disruptions have raised concerns over whether production can be maintained near its current level of 1.2 million barrels per day.
