Oil prices were on track for a weekly decline on Friday after US President Donald Trump extended a pause in attacks on Iran’s energy plants for 10 days, though investors remained on edge as an imminent resolution to the conflict looked unlikely.
On Friday, the benchmarks were little changed after a bullish previous session. Brent futures fell 4 cents to $107.97 per barrel as of 0608 GMT, while US West Texas Intermediate futures were down 40 cents at $94.08 per barrel.
WTI futures, which have jumped 40 per cent since the US and Israel launched strikes on Iran on February 28, fell 4.6 per cent this week, while Brent, up more than 48 per cent since the war began, was down 4 per cent for the week.
“Despite talks of de-escalation, oil is trading on war longevity, not just headlines. Any direct damage to oil infrastructure or prolonged conflict could force markets to rapidly reprice higher,” said Priyanka Sachdeva, analyst at Phillip Nova.
While Trump extended to April 6 his deadline for Iran to reopen the Strait of Hormuz or face the destruction of its energy infrastructure, the US has also sent thousands of troops to West Asia, with Trump weighing whether to use ground forces to seize Iran’s strategic oil hub of Kharg Island.
An Iranian official told Reuters that a 15-point US proposal, conveyed to Tehran by Pakistan, was “one-sided and unfair”.
The war has taken 11 million barrels of oil per day out of global supply, with the International Energy Agency describing the crisis as worse than the two oil shocks of the 1970s and the Russia-Ukraine war on gas put together.
Analysts at Macquarie Group said if the war begins to wind down soon, oil prices will fall quickly in coming months, but still remain at pre-conflict levels. However, prices could rise to $200 if the war drags on until end of June, they said.
“With each passing day, market pressure is building. Asian countries are tapping buffer stocks and weighing demand adjustments,” said Mukesh Sahdev, founder & CEO of Australia-based consultancy XAnalysts.