Brent crude futures fell 21 cents, or 0.22%, to $95.24 a barrel by 0003 GMT after settling down 2.84% in the previous session. U.S. West Texas Intermediate crude was at $92.94 a barrel, down 10 cents, or 0.11%, following a 3.1% loss on Thursday.
Both contracts are set to post their first weekly gain in three weeks, with WTI up more than 6%, after fighting flared up in the Middle East as U.S.-Iran war peace talks dragged on while traffic in the Strait of Hormuz, where a fifth of the world's oil passes, remained limited.
Analysts have flagged concerns of falling oil inventories globally that could cause a price spike in the third quarter. Hezbollah leader Naim Qassem rejected on Thursday a U.S.-brokered agreement between Israel and the Lebanese government to halt the fighting. Iran has made a ceasefire in Lebanon a condition for any peace deal with Washington.
“Any optimism remains heavily clouded by a tangled web of headlines and counter-headlines.”
Tony Sycamore, IG market analyst
U.S. President Donald Trump said on Thursday he believed progress was being made between Israel and Lebanon and that Lebanon deserved to have peace.
"Any optimism remains heavily clouded by a tangled web of headlines and counter-headlines," IG market analyst Tony Sycamore said in a note. "From a technical perspective, as long as (WTI) crude oil remains above trendline support in the low $80s, the risks remain skewed to the upside."
OPEC is sticking to its oil demand growth forecast of 1.2 million barrels per day for this year, Secretary General Haitham Al Ghais said on Thursday, despite the Middle East conflict and closure of the Strait of Hormuz. Iranian oil exports have fallen to their lowest level in six years mainly due to the U.S. naval blockade, according to shipping data, although weak demand in China has depressed prices for the oil.
Background
The ongoing tensions in the Middle East and their impact on oil prices highlight the geopolitical risks that continue to influence global energy markets.
As the situation evolves, market participants will be closely monitoring developments in the US-Iran peace talks and their potential implications for oil supply and prices.
