Oil down 2pc amid resumption of Hormuz shipments even as vessel hit near Oman

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In this file photo, the sun is seen behind a crude oil pump jack. — Reuters/File
In this file photo, the sun is seen behind a crude oil pump jack. — Reuters/File

Crude prices sank two per cent on Friday and were headed for steep weekly losses amid easing supply concerns as more stranded oil tankers exited the Strait of Hormuz, even though a cargo vessel was hit near Oman on Thursday.

Brent crude futures fell $1.50, or 1.99pc, to $73.76 a barrel as of 0649 GMT, while US West Texas Intermediate fell $1.49, or 2.07pc, to $70.43 a barrel.

Refining giant Saudi Aramco resumed oil loading on Friday at its Ras Tanura terminal in the Gulf after a near four-month halt, shipping data from LSEG showed.

Two Very Large Crude Carriers (VLCC) were seen loading crude at the terminal, while another waited nearby, the data showed. Each VLCC is capable of loading two million barrels of oil.

“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 jumped more than 2pc on Thursday after a cargo vessel was hit by an unknown projectile near Oman, prompting the UN’s 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 designated Hormuz routes is not guaranteed.

Brent oil and WTI crude are both headed for losses of around 8pc 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 war on Iran began in February after a ceasefire deal reopened the waterway, while 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.

Meanwhile, earthquakes in Venezuela that happened 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 1.2m barrels per day, sources said.

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