Oil prices fell about 2 percent on Friday, putting crude on track for one of its biggest weekly declines in months as concerns over supply through the Strait of Hormuz continued to ease despite a fresh security incident near Oman.
Brent crude dropped $1.47, or 1.95 percent, to $73.79 a barrel, while US West Texas Intermediate (WTI) crude fell $1.44, or 2 percent, to $70.48 a barrel during early trading.
The latest decline came as more oil tankers resumed sailing through the Strait of Hormuz after being stranded during months of conflict, easing fears of major supply disruptions in one of the world’s busiest oil shipping routes.
Shipping data also showed Saudi Aramco restarted crude loading operations at its Ras Tanura export terminal on Friday after a pause of nearly four months. Two Very Large Crude Carriers were loading oil at the terminal, while another tanker waited nearby. Each vessel can carry up to 2 million barrels of crude.
Supply outlook improves
Analysts said the market is focusing more on improving oil flows than on recent security risks.
“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.
Oil prices briefly rose more than 2 percent on Thursday after a cargo vessel was struck by an unidentified projectile near Oman. The incident prompted the United Nations shipping agency to suspend its voluntary evacuation programme in the area.
According to two US officials quoted by Reuters, Iranian forces fired on the cargo ship as it attempted to pass through the Strait of Hormuz. Iranian authorities later said they could not guarantee the safety of ships travelling outside designated Hormuz routes.
Even so, the market remained focused on recovering exports, with both Brent and WTI expected to end the week about 8 percent lower.
Recent shipping data showed crude movements through the Strait of Hormuz climbed to their highest level since fighting involving Iran began in February. The increase followed a ceasefire agreement that allowed the vital waterway to reopen.
However, shipping volumes are still well below normal. Before the conflict started on February 28, around 125 vessels passed through the strait each day.
Analysts at ING said much of the recent increase reflects previously stranded tankers finally leaving the Persian Gulf rather than a full recovery in trade.
“Once stranded vessels have moved out, we could see a pullback in flows,” the bank said in a research note.
Meanwhile, traders are also monitoring Venezuela after earthquakes struck the country on Thursday.
Early assessments suggested the country’s major oilfields, refineries, pipelines and export terminals suffered little damage because they are located away from the hardest-hit areas.
However, widespread power outages have raised concerns about whether Venezuela can maintain oil production near its current level of almost 1.2 million barrels per day.
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