Oil prices slipped on Thursday, giving back earlier session gains as talks between Oman and Iran over access to the Strait of Hormuz played out alongside U.S. strikes on Iranian targets. A tanker route disruption near the Black Sea and a drone-damaged Lukoil refinery added further strain to supply.
Oil prices reversed course on Thursday, giving back earlier gains as investors weighed talks between Oman and Iran over the Strait of Hormuz against escalating tensions between Washington and Tehran.
Brent and WTI slide off session highs
Brent futures fell 36 cents, or 0.40%, to $90.38 a barrel by 1111 GMT, after touching a high of $93.31 earlier in the session. U.S. West Texas Intermediate crude dropped 72 cents, or 0.85%, to $83.74, having climbed as high as $85.94 in the same session.
Oman-Iran talks proceed alongside US strikes
Talks between Oman and Iran on managing the strait continued, according to the Iranian Labour News Agency, and Hamad Hussain, a climate and commodities economist at Capital Economics, said the contact could suggest progress is being made on reopening the waterway. But tensions kept simmering after the U.S. military said it had hit dozens of Islamic Revolutionary Guard Corps targets in Iran, in an operation launched after Tehran fired ballistic missiles at U.S. forces in the Middle East.
According to KCM Trade's Tim Waterer: "the risk premium in oil is not going anywhere". The Strait of Hormuz, which normally handles around a fifth of global oil and liquefied natural gas flows, has stayed a focal point for oil markets since the Iran war began on February 28.
Qatari tanker transits Hormuz as Black Sea loadings are diverted
Iran's Fars news agency reported that a Qatari LNG tanker passed through the Iran-designated route in the strait with Tehran's permission. The vessel, which loaded cargo at Qatar's Ras Laffan terminal around July 4 to 6, sailed out of the strait overnight on July 29, according to Kpler and LSEG data.
Elsewhere, tankers booked to load crude oil at the Caspian Pipeline Consortium terminal are heading away from the Black Sea after a vessel was hit during loading at the terminal on Thursday, according to two sources and shipping data. A Ukrainian drone attack also caused a fire at Lukoil's Perm refinery that damaged and forced the shutdown of one of its crude distillation units, two industry sources told Reuters.
Hussain said the disruption across several maritime chokepoints, combined with a rapid drawdown in oil inventories, could feasibly keep prices higher than where they currently sit.
Source: Commodities & Futures News
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