Oil prices held steep weekly losses on Thursday as progress toward reopening the Strait of Hormuz offset a surprise build in U.S. crude inventories. WTI crude rose 0.2% to $75.38 a barrel and Brent added 0.3% to $79.71, with both benchmarks still tracking declines of more than 10% for the week. Meanwhile, the UAE has ramped up tanker shuttles through the strait to keep barrels flowing to Asia.
WTI crude futures gained 0.2% to $75.38 a barrel by 02:55 ET on Thursday, while Brent futures expiring in October rose 0.3% to $79.71. Both contracts ended little changed on Wednesday but remained on track for weekly losses of more than 10%, as traders weighed the Hormuz shipping progress against a fresh U.S. inventory build.
Iran-Oman deal eases Hormuz fears
Sentiment improved after Iran said it had reached an agreement with Oman on the coordinates of a proposed shipping route through the Strait of Hormuz, a waterway that handles roughly a fifth of global oil and LNG trade. But the deal falls short of a full reopening, with cargo fees, inspections and security arrangements still unresolved.
President Trump said Wednesday at a Las Vegas rally that Washington was holding talks with Tehran, though Iran has publicly denied that peace talks are underway. According to ING analysts: "meaningful progress there is essential before disrupted energy flows can realistically resume." Analysts said the geopolitical risk premium has not disappeared, given repeated setbacks and uncertainty over whether any agreement can be fully implemented.
US crude inventories surprise higher
Further limiting gains, U.S. crude oil inventories unexpectedly rose by about 2.5 million barrels last week, compared with market expectations for a 1.5 million barrel drawdown, suggesting softer near-term demand. Refined fuel markets tightened further, with gasoline stockpiles falling 1.64 million barrels and distillate stockpiles falling 3.47 million barrels.
Security risks elsewhere persisted too: Houthi attacks on shipping in the Red Sea, fighting affecting Russian and Ukrainian maritime trade, and disruptions to Kazakhstan's export route show supply risks remain despite the Hormuz optimism.
UAE's shuttle trade keeps barrels flowing
The United Arab Emirates has moved more oil through the Strait of Hormuz than any other producer over the past two months, providing a buffer for global markets reeling from a historic energy crisis, per Rigzone. Adnoc, the UAE's state oil producer, has sold over 130 million barrels in seven tenders since the start of June, according to traders familiar with the matter. That's equivalent to more than a month of demand from Japan, Asia's third-largest oil consumer.
Vortexa estimates the UAE was the only Middle Eastern producer to reach pre-war levels of seaborne exports in June and July, with most of the barrels picked up by Asian refiners including Japan and China. Sparta Commodities analyst June Goh said the barrels have helped stabilize supply into Asia, as refiners there cannot easily replace medium-sour Middle East crude.
A comprehensive deal to reopen the strait would likely boost outbound volumes from the Persian Gulf, but the stop-start nature of the negotiations means analysts and traders expect the shuttle trade to continue in some form.
Sources: Investing.com, Rigzone
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