Brent and WTI crude both fell Friday, putting oil on track to snap a two-week winning streak even as the standoff between Washington and Tehran drags on. Goldman Sachs says Gulf exports have partly recovered from wartime lows, while Venezuela is reportedly weighing an exit from OPEC.
Prices slip after a higher close
Brent crude futures fell 60 cents, or 0.67%, to $89.10 a barrel at 0636 GMT on Friday, while West Texas Intermediate dropped 64 cents, or 0.77%, to $82.89. Both benchmarks were headed for a weekly loss, with Brent down 5.3% and WTI down 4.3% for the week.
The declines follow a stronger session Thursday, when ICE Brent settled up 2.1% after a Wall Street Journal report that President Donald Trump told mediators he has no interest in reviving the terms of the June memorandum of understanding with Iran. The Trump administration has repeatedly told mediators it has no interest in reviving that agreement, complicating efforts to restart talks.
Instead, Trump indicated the U.S. is content to see whether growing economic pressure on Iran yields better results. Washington said earlier Thursday it was not in talks with Iran, even as other countries keep trying to re-engage the two sides.
Gulf flows recover, but not fully
ING analysts said the diplomatic roadblock has coincided with more crude oil moving through the Strait of Hormuz. Analysts had assumed flows through the chokepoint averaged 5 million barrels per day, though some estimates now put the figure at 6 million to 8 million barrels per day. Goldman Sachs on Thursday estimated total Gulf exports at 15 million to 16 million barrels per day, 7 million to 8 million bpd below pre-war levels but 5 million to 6 million above March's low point.
Sanctions pressure and a possible OPEC exit
The U.S. on Monday announced what it called the "toughest sanctions in history" on Iran, a measure Tehran called an inhumane and hostile act that had lost its effectiveness. Separately, Venezuela is considering leaving OPEC as relations with Washington improve following the ousting of Nicolas Maduro at the start of the year, after the UAE's earlier departure from the group. The U.S. has taken control of Venezuelan oil sales, and reports suggest it may also take a stake in Venezuelan oil fields.
Sources: Investing.com, ING (via Investing.com)
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