Oil Slips As Shipping Through Strait Resumes After Vessel Incident Near Oman

Oil prices slipped on Friday, extending weekly losses as fears of major supply disruptions eased.

With more oil tankers resuming transit through the Strait of Hormuz, despite a fresh security incident involving a cargo vessel near Oman.

Brent crude futures fell 19 cents, or 0.25%, to $75.07 a barrel, while US West Texas Intermediate (WTI) crude declined 13 cents, or 0.18%, to $71.79 a barrel. Both benchmarks are on track to end the week nearly 7% lower after recent geopolitical risk premiums began to unwind.

The losses followed a volatile trading session on Thursday, when oil prices jumped more than 2% after a cargo ship was struck by an unidentified object near Oman. The incident prompted the United Nations’ shipping agency to suspend its voluntary evacuation programme for vessels operating in the region.

According to Reuters, two US officials said Iranian forces fired at the cargo vessel as it attempted to transit the Strait of Hormuz. Iranian authorities later said they could not guarantee the safety of ships travelling outside designated Hormuz shipping lanes.

Even so, the market found reassurance in signs that tanker traffic through the strategic waterway is recovering. Shipping data released on Thursday showed crude exports through the Strait of Hormuz climbed to their highest level since fighting between the US, Israel and Iran broke out in February, aided by a ceasefire that reopened the vital shipping route.

Traffic, however, remains well below the pre-conflict average of around 125 vessel transits a day, suggesting that shipping activity has yet to return to normal.

“With geopolitical risks once again influencing oil prices, the market will be watching closely whether tanker traffic continues to recover or if renewed security concerns force producers to rethink planned output increases,” IG market analyst Tony Sycamore said.

Separately, markets also kept an eye on Venezuela after powerful earthquakes struck the country on Thursday. Preliminary assessments indicated minimal damage to the country’s oil, gas and refining infrastructure, as most production facilities are located away from the hardest-hit areas.

However, a power outage triggered by the earthquakes has raised concerns about whether Venezuela can sustain crude output of around 1.2 million barrels per day, according to industry sources.