Oil Prices Slide as Fresh Talks Raise Hopes of Easing Supply Risks

By Adedapo Adesanya

Oil prices eased on Friday as fresh discussions were reportedly in motion after attacks along Middle East shipping routes stoked concerns about prolonged ‌supply disruptions.

Brent crude futures settled at $104.61 a barrel after going down by $3.02 or 2.81 per cent, while US West Texas Intermediate (WTI) crude finished at $100.05 a barrel, down by $2.43 or 2.37 per cent. Both benchmarks rose more than 8 per cent over the week after ​an escalation in shipping attacks in the region.

The Financial Times reported that foreign ministers in the Middle East are trying to work out a temporary deal with Iran to manage shipping through the Strait of Hormuz.

The gathering is scheduled to be held on Monday in the Omani coastal city of Salalah, the report said, citing two people briefed on the matter.

In the past week, resurgent conflict has stoked concerns of further disruptions to global oil supplies and the flow of crude through the Strait of Hormuz. Vessel transits ​at the Strait of Hormuz fell to ⁠seven on Thursday from 11 the previous day, preliminary ship-tracking data showed on Friday.

The strait handled about 125 commodity vessels and one-fifth of global daily oil and liquefied natural gas supplies before the Iran war began in late February.

The US and Iran have traded strikes, while the Iran-backed Houthis have attacked Saudi Arabia and ignited tensions in the Bab al-Mandeb Strait.

Yemen’s Iran-aligned Houthis on Friday reached the island of Perim in the Bab el-Mandeb Strait, potentially tightening their grip on one of the world’s vital shipping routes.

Satellite imagery showed smoke on Thursday in the vicinity of Saudi Arabia’s East-West Pipeline, vital for the kingdom to divert its crude exports away from Hormuz. Iran had warned that energy infrastructure across the Gulf, including US oil and gas interests, was vulnerable.

Saudi Arabia’s crude supply fell by 2.3 million barrels per day in the month to 6 million ‌barrels per day in ⁠August, the lowest level in more than three decades.

As more reporting said a pumping station on the pipeline had been damaged by Iran-affiliated militants, prices stayed lower.

Two European Central Bank (ECB) policymakers ​opened the door on Friday to further interest rate increases if a war-fueled rise in energy prices continues and pushes up ​other prices in the euro ⁠zone.