Oil prices moved higher on Friday, driven by a delay in scheduled talks between the United States and Iran and a reduction in the volume of tanker traffic exiting the Persian Gulf.
In London, Brent crude futures traded above $80 per barrel. This followed Iran's postponement of talks with the US aimed at initiating a lasting peace agreement, coinciding with an escalation of fighting in southern Lebanon. Traffic through the Strait of Hormuz decreased on Friday, coming just a day after a surge in oil shipments as both nations pledged to lift a mutual blockade.
Ship-tracking data indicated that a supertanker named Desh Vibhor had turned around and was once again heading from inside the Persian Gulf toward the strait.
Prices are still down 7.7% for the week, following the signing of a memorandum of understanding between the US and Iran intended to reopen the Strait of Hormuz. The waterway, which handles about one-fifth of global oil shipments, had been closed for nearly four months due to a war that erupted on February 28th. Optimism surrounding the deal cooled after US Vice President JD Vance postponed a trip to Switzerland on Thursday for follow-on talks aimed at a broader arrangement with Iran.
"There will likely be some back-and-forth throughout the negotiation process," said Susan Bell, Senior Vice President of Downstream Research at Rystad Energy in Calgary, by phone. "Both sides will be posturing over the next 60 days."
"While the deal is not necessarily doomed from the outset, its durability appears to face substantial risks," stated Helima Croft, Head of Global Commodity Strategy at RBC Capital Markets, in a report. She added that "maritime logistical constraints, congressional opposition, and Israel's continued strikes in southern Lebanon" are primary threats to the normalization of oil shipments.
Friday's trading was subdued due to the US Juneteenth holiday.
Price Quotes:
Brent crude for August settlement gained 0.9% to settle at $80.57 a barrel.
West Texas Intermediate for July delivery rose 0.9% to $77.54 a barrel as of 1:52 p.m. New York time.
The more actively traded August contract advanced 0.7% to $76.54 a barrel.
Comments