Crude oil prices sank 2% on Friday and were on track for steep weekly losses as easing supply concerns emerged from more stranded oil tankers exiting the Strait of Hormuz, even though a cargo vessel was hit near Oman on Thursday. Brent crude futures fell $1.50, or 1.99%, to $73.76 a barrel, while US West Texas Intermediate dropped $1.49, or 2.07%, to $70.43 a barrel, as of 11:49 am PKT.
Saudi Aramco Resumes Oil Loading at Ras Tanura
Refining giant Saudi Aramco resumed oil loading on Friday at its Ras Tanura terminal in the Gulf after a nearly four-month halt, according to shipping data from LSEG. Two Very Large Crude Carriers (VLCCs) were seen loading crude at the terminal, with another waiting nearby. Each VLCC can load up to 2 million barrels of oil.
Market Reaction to Increased Flows
“There is a general selloff as the market reacts to the increased flows exiting the Strait of Hormuz and China not yet picking up crude demand,” said June Goh, senior oil market analyst at Sparta Commodities. Both benchmark contracts had jumped more than 2% on Thursday after a cargo vessel was hit by an unknown projectile near Oman, prompting the U.N. shipping agency to suspend its voluntary evacuation scheme.
Two US officials told Reuters that Iran fired on the cargo ship as it attempted to pass through the strait. Iranian authorities said the security of vessels passing outside the designated Hormuz routes is not guaranteed.
Weekly Losses and Shipping Data
Brent oil and WTI crude are both headed for losses of around 8% this week. Data showed on Thursday that crude shipments through the Strait of Hormuz rose this week to their highest level since the US-Israeli conflict with Iran began in February, after a ceasefire deal reopened the waterway. Concerns about how long the strait would stay open also boosted trade. However, overall traffic remains a fraction of the daily average of 125 ships passing through the strait before the February 28 conflict began.
“Much of the increase reflects previously stranded vessels leaving the Persian Gulf. Vessel flows into the Gulf remain much more modest. It suggests that once stranded vessels have moved out, we could see a pullback in flows,” ING analysts wrote in a note.
Earthquakes in Venezuela Raise Supply Concerns
Meanwhile, earthquakes in Venezuela on Thursday also raised supply concerns. Preliminary assessments by workers of Venezuela’s vast oil, gas, and refining infrastructure so far showed limited damage, as most of the country’s largest output regions, refineries, pipelines, and terminals are far from the hardest-hit areas. Still, a lack of power has cast doubt on whether oil output can be sustained at its pre-earthquake level of close to 1.2 million barrels per day, sources said.
