LONDON: Oil prices swung on Friday as the US outlined moves to manage the supply crisis, while leading European nations, Japan and Canada offered to join efforts to secure safe passage for ships through the Strait of Hormuz.
Brent futures for May fell $0.69, or 0.64 percent, to $108 a barrel at 4:13 p.m. Saudi time, having reached over $110 a barrel in earlier trading. US West Texas Intermediate crude futures for April, which expire on Friday, were down $0.62, or 65 percent, to $94.93.
At those levels, Brent was heading for a weekly gain of almost 3.5 percent, while the front-month WTI was down around 3.9 percent from where it closed last Friday. WTI’s discount to Brent hit its widest in 11 years on Wednesday
Israel and Iran traded fresh attacks on Friday, following a hit on an oil refinery in Kuwait.
In a joint statement on Thursday, after earlier hesitating, the UK, France, Germany, Italy, the Netherlands and Japan expressed “our readiness to contribute to appropriate efforts to ensure safe passage through the Strait,” through which 20 percent of the world’s oil and LNG transit.
Looking to curb soaring oil prices, US Treasury Secretary Scott Bessent said the US may soon remove sanctions from Iranian oil stranded on tankers, and said a further release of crude from the US Strategic Petroleum Reserve was possible.
Brent jumped higher than $119 a barrel on Thursday, coming close to a March 9 peak, after Iran responded to an Israeli attack on a major gas field by knocking out 17 percent of Qatar’s LNG capacity, causing damage that will take up to five years to repair.
US President Donald Trump said he told Israel not to repeat attacks on Iranian gas infrastructure. Israeli Prime Minister Benjamin Netanyahu said his country had acted alone in the attack and Iran no longer has the capacity to enrich uranium or make ballistic missiles.
Earlier in the Friday session, both benchmarks had shed some of their “war premiums” as world leaders started to acknowledge a need for restraint and de-escalation, said Priyanka Sachdeva, senior market analyst at Phillip Nova. She added that markets will remain sensitive to the critical Hormuz chokepoint.
“The damage has been inflicted, and even if safe passage for tankers is somehow negotiated through Hormuz, reviving logistics fully fledged can take an awfully long time,” Sachdeva said.
In a boost to US supply, North Dakota’s crude output is expected to rise this month and in following months as operators in the third-largest oil-producing state restart inactive wells and winter restrictions are eased, the state’s regulator said on Thursday.
The North Dakota Department of Mineral Resources said, however, the pace of activity would depend on how long oil prices stay high and that oil majors’ budgets have already been set.
