Oil prices set for weekly decline as Iran tensions persist

Oil prices are set for their first weekly fall in three weeks, with tensions between the US and Iran lingering along with uncertainty over efforts to secure the reopening of the Strait of Hormuz.

Brent futures slip by 25 cents or 0.3 percent, at $89.45 a barrel, while U.S. West Texas Intermediate crude futures are down 22 cents or 0.3 percent at $83.31 a barrel. Brent futures were heading for a 5.1 percent weekly loss and WTI futures for a 4.5 percent loss weekly.

The declines emerged after concerns about supply disruptions, sparked by a flare-up in tensions around the key global shipping lane, eased, following indications of crude shipments flowing through the Strait of Hormuz again. Also, markets were factoring in stalled U.S. Diplomacy efforts with Iran.

“Although talks continue to hit a dead end between Iran and the US, the markets are betting that Washington is tilting more towards using the sanction tool rather than a military one and there is news regarding Oman-Iran cooperation for a joint trade corridor, which will lower the geopolitical risk premiums”, said Suvro Sarkar, head of energy research at DBS Bank.

Flows through the Strait of Hormuz, although still increasing, are below normal levels, continuing to command attention from traders and analysts.