US crude rises on Iran tensions, but posts weekly loss
Oil rose on Friday after attacks on two oil tankers in the Gulf of Oman this week raised concerns about potential supply disruptions, but prices remained on track for a weekly loss on fears that trade disputes will dent global oil demand.
U.S. West Texas Intermediate crude futures settled 23 cents higher at $52.74. Brent crude futures rose 70 cents, or 1.1%, at $62.01 a barrel.
Futures briefly extended gains on Friday as Iranian military fast-boats in the Gulf of Oman were preventing two privately owned tug boats from towing away one of the oil tankers.
The attacks near Iran and the Strait of Hormuz pushed up oil prices by as much as 4.5% on Thursday.
It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies as tensions increase between the United States and Iran. Washington blamed Iran for Thursday’s attacks, prompting a denial and criticism from Tehran.
“Yesterday’s attacks on the Japanese and Norwegian tankers in the Gulf of Oman underscore the severity of the security risks stemming from the Iran crisis and the difficulty of achieving a diplomatic off-ramp as long as the crippling U.S. sanctions remain in place,” RBC bank said.
Still, Brent was on course to register a weekly decline of more than 1.5% and U.S. crude fell 2.7% on the week.
“The deteriorating demand outlook is holding back prices, despite these tensions,” said John Kilduff, a partner at Again Capital in New York.
Slowing economic conditions have eaten into demand growth, overshadowing ongoing tensions between the U.S. and Iran, Kilduff said. As a result, prices may be stuck in a holding pattern. “We are stalemated here.”
The International Energy Agency cut its demand growth forecast for 2019 by 100,000 barrels per day to 1.2 million bpd, citing worsening prospects for world trade.
However, the Paris-based agency said it expects demand growth to climb to 1.4 million bpd for 2020.
On Thursday OPEC cut its 2019 forecast for growth in global oil demand even lower than the IEA, to 1.14 million bpd.
On the supply side, U.S. sanctions on Iran and Venezuela, an output cut pact by OPEC plus its allies, fighting in Libya and attacks on tankers in the Gulf of Oman added only limited uncertainty to supply, the IEA said.
Surging U.S. supply, as well as gains from Brazil, Canada and Norway, would contribute to an increase in non-OPEC supply of 1.9 million bpd this year and 2.3 million bpd in 2020.
U.S. energy firms reduced the number of oil rigs operating for a second week in a row, with the country’s production growth expected to slow as crude prices dropped close to their lowest levels of the year and most drillers cut spending.
Drillers cut one oil rig in the week to June 14, bringing the total count down to 788, still the lowest since February 2018, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
Tensions in the Middle East have escalated since U.S. President Donald Trump withdrew from a 2015 multinational nuclear pact with Iran and reimposed sanctions, especially targeting Tehran’s oil exports.
Iran, which has distanced itself from the previous attacks, has said it will not be cowed by what it describes as psychological warfare.
The U.S. military later released a video that it said showed Iran’s Revolutionary Guard removing an unexploded mine from the side of a Japanese-owned oil tanker.
In a statement on Thursday evening, the Iranian mission to the United Nations said Tehran “categorically rejects the U.S. unfounded claim with regard to 13 June oil tanker incidents and condemns it in the strongest possible terms.”
Source: Reuters
