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Oil prices zig-zagged between negative and positive territory yesterday as traders weighed supply disruptions against the potential restart of peace talks between the US and Iran that could help limit those disruptions. Prices rose 2% earlier in the day on fears of renewed military escalation in the region after Iran released footage on Thursday of commandos boarding a cargo ship in the Strait of Hormuz, and as progress stalled on re-opening the key waterway.
Crude futures then pulled back after Reuters reported that Iranian Foreign Minister Abbas Araqchi was expected to arrive in Islamabad late on Friday to discuss proposals for resuming peace talks with the US after talks collapsed earlier this week.
Prices fell further after CNN reported that US President Donald Trump was sending special envoy Steve Witkoff and Jared Kushner to Pakistan for talks with Iran’s foreign minister. “The (Strait of Hormuz) disruption has created a complex logistical challenge that will take time to resolve …. Clearing this backlog will take weeks, as vessels are sequenced through ports that are themselves operating under constrained conditions,” said Saxo Bank analyst Ole Hansen in a note.
Brent crude futures were down 58 cents, or 0.6%, at $104.49, and US West Texas Intermediate futures were down $2.31, or around 2.1%, to $93.54. “Traders are liquidating length ahead of an unusually unpredictable weekend and will readjust their positions Sunday night based on Iranian developments,” said Tamas Varga of oil broker PVM.
For the week, Brent is up about 16% and WTI 11%, the second-largest weekly gains since the war began. Navigation through the Strait of Hormuz, which before the war carried about a fifth of global oil output, remains effectively blocked. Iran’s capture of two cargo ships highlighted Washington’s difficulties in trying to control the passage.
Only five ships, including an Iranian oil products tanker, have moved through the Strait of Hormuz in the past 24 hours, shipping data showed. – Reuters
