Oil set for big weekly losses as tankers exit Strait of Hormuz

LONDON: Crude prices plunged by about 3% on Friday, on course for steep weekly losses, as more oil tankers exited the Strait of Hormuz, easing supply concerns, even though a cargo vessel was hit near Oman on Thursday.

Brent crude futures fell $2.42, or 3.2%, to $72.84 a barrel by 1323 GMT. U.S. West Texas Intermediate lost $1.97, or 2.7%, to $69.95.

The Brent benchmark was heading for a weekly decline of about 9.7%, while WTI traded around 8.8% lower than its close last Thursday before the market closed for a public holiday last Friday.

“The predominant view, it appears, remains one of imminent oversupply,” said PVM analyst Tamas Varga.

Refining giant Saudi Aramco resumed oil loading on Friday at its Ras Tanura terminal in the Gulf after a nearly four-month halt, shipping data from LSEG showed.

Two Very Large Crude Carriers, which can load cargoes of 2 million barrels, loaded crude at the terminal while another waited nearby, the data showed.

“There is a general selloff as the market reacts to the increased flows exiting the Strait of Hormuz and China not yet picking up crude demand,” said June Goh, senior oil market analyst at Sparta Commodities.

UNKNOWN PROJECTILE HITS VESSEL

Both benchmark contracts jumped more than 2% on Thursday after a cargo vessel was hit by an unknown projectile near Oman, prompting the U.N.’s shipping agency to suspend its voluntary evacuation scheme.

Two U.S. officials told Reuters that Iran fired on the cargo ship as it attempted to pass through the strait. Iranian authorities said the security of vessels passing outside designated Hormuz routes is not guaranteed.

Iran on Friday reasserted its right to control shipping through the Strait of Hormuz and warned Gulf states against siding with the United States.

Data on Thursday showed that crude shipments through the strait rose this week to their highest since the U.S.-Israeli conflict with Iran began at the end of February.

Despite the ceasefire deal that reopened the waterway, overall traffic is far below the pre-war daily average.

“If the number of transits does not increase more strongly next week either, scepticism in the market is likely to grow, so that the oil price is likely to rise again,” Commerzbank analysts said on Friday.

Meanwhile, Russian authorities are considering a diesel export ban for several months, state news agency TASS said on Friday.

Although a major diesel exporter, Russia faces fuel supply issues after Ukrainian drone attacks have caused extensive damage to its oil refineries and other energy infrastructure.