Oil prices fall on mounting hopes for de-escalation in US-Iran War

HOUSTON: Oil prices fell on Friday as traders gained confidence that renewed conflict between the US and Iran was growing less likely. Brent crude futures settled at USD93.09 a barrel, down USD1.94 or 2.04percent.

The previous session, Brent settled 2.84percent lower. US West Texas Intermediate crude finished at USD90.54 a barrel, down USD2.50, or 2.69percent, following a 3.1percent loss on Thursday. “The market is not seeing escalation between the parties,” said Phil Flynn, senior analyst at Price Futures Group. “Even though we don’t have a deal, it seems the market is seeing a de-escalation.”

Petroleum Development Oman said operations at Mina al Fahal port were unaffected after three sources told Reuters that oil loading had been suspended following an explosion near its mooring berths.

Oman exports 800,000 to 900,000 barrels per day of crude from the terminal.

Both contracts still looked set to post their first weekly gains in three weeks, with Brent up 1.18percent and WTI around 3.64percent. The contracts rose earlier in the week after fighting flared in the Middle East as US-Iran war peace talks dragged on while traffic in the Strait of Hormuz, where a fifth of the world’s oil passes, remained limited.

“As hopes for an agreement between the US and Iran were dashed once again, the price of Brent crude and European natural gas rose slightly this week,” Commerzbank analysts said on Friday. However, Brent’s gains have been capped by oil inventories lasting longer than expected, rerouted exports and falling demand, Commerzbank added. Hezbollah leader Naim Qassem rejected on Thursday a US-brokered agreement between Israel and the Lebanese government to halt the fighting. Iran has made a ceasefire in Lebanon a condition for any peace deal with Washington.

US President Donald Trump said on Thursday he believed progress was being made between Israel and Lebanon and that Lebanon deserved to have peace. “Any optimism remains heavily clouded by a tangled web of headlines and counter-headlines,” IG market analyst Tony Sycamore said in a note.

OPEC is sticking to its oil demand growth forecast of 1.2 million bpd for this year, Secretary General Haitham Al Ghais said on Thursday, despite the Middle East conflict and closure of the Strait of Hormuz. Iranian oil exports have fallen to their lowest level in six years mainly due to the US naval blockade, according to shipping data, although weak demand in China has depressed prices for the oil.