Crude prices fell by more than 3 per cent on Friday as oil tankers kept exiting the Strait of Hormuz, easing supply concerns the day after a cargo vessel was hit near Oman.
Brent crude futures settled at $71.99 a barrel, down $3.27 or 4.34 per cent, while the US West Texas Intermediate (WTI) finished at $69.23 a barrel, down $2.69 or 3.74 per cent. Week-on-week, the Brent benchmark fell 10.86 per cent while the US WTI fell 9.62 per cent.
Prior to the agreement on a 60-day ceasefire, markets worried supplies would fall short of demand, but those fears seem to be passing.
Crude transits through the Strait of Hormuz rose to the highest weekly tally since the onset of the US-Iran conflict this week, with more than 16 million barrels passing through the waterway this Wednesday-Thursday, raising hopes of a full, gradual reopening.
This happened despite Iran firing at a Taiwanese cargo ship, raising fears that Hormuz transit could be choked off again. Iran’s IRG fired several drones at the Taiwan-owned Ever Lovely cargo ship, reportedly attempting to cross the Hormuz through “unauthorised routes,” damaging the vessel’s bridge some 7 miles off the Omani coast on Thursday.
The attack on the ship prompted the United Nations’ shipping agency to pause its voluntary evacuation scheme to enable hundreds of stranded ships and thousands of seafarers to sail out of the Gulf through the strait.
On Friday, Iran reasserted its right to control shipping through the Strait of Hormuz and warned Gulf states against siding with the US.
Many ships have been switching on their public automatic identification system (AIS) tracking transponders, but some may have gone undetected due in part to major disruption of AIS signals, as well as ships not showing their movements through the strait. That makes it difficult to estimate the complete volume of shipments.
Chinese crude oil imports this month are on course to book an even weaker month than May, according to Kpler data, which sees the daily average at just 6.4 million barrels.
According to media reports, Iraq has considered leaving the Organisation of the Petroleum Exporting Countries (OPEC) if the oil group does not allow it to significantly increase its crude production quotas, currently at 4.378 million barrels per day, a claim which the Iraqi Oil Ministry subsequently denied and called ‘premature’.