Oil prices fell in early trading on
Friday but remained on track for weekly gains as the United
States and Iran continued trading strikes.
Concerns that accelerating inflation could soften oil demand
weighed on the market and pressured prices.
Brent futures fell 6 cents, or 0.08 per cent, to $76.24 a
barrel by 0125 GMT. U.S. West Texas Intermediate (WTI) crude
lost 4 cents, or 0.06 per cent, to $72.04.
For the week, Brent was set for a 6 per cent gain and WTI was headed
for a 5 per cent increase.
Iranian armed forces launched attacks on US military
infrastructure in Gulf states on Thursday following US strikes
on Iran’s southern coastal and eastern provinces, further
straining a three-week-old ceasefire. Separately, Iranian media
reported multiple explosions across southern Iran, including
Bushehr, where one of the country’s nuclear plants is located.
The renewed fighting came the day that Iran buried its slain
Supreme Leader Ayatollah Ali Khamenei, the culmination of a week
of mass funeral processions and rallies. Khamenei was killed on
the first day of the war on February 28.
The conflict has delayed the full reopening of the Strait of
Hormuz, a key waterway that about 20 per cent of daily global oil and
gas supplies passed through before the war.
“Despite the US ramping up attacks on military sites in
Iran, the market drew some reassurance from the Trump
administration’s decision to avoid targeting Iranian energy
infrastructure,” said Daniel Hynes, the senior commodity
strategist for ANZ bank.
“This was aided by comments from President Trump, who said
he doesn’t expect a return to a full-scale conflict.”
U.S. President Donald Trump had said on Wednesday he did not
think the war would restart and that “anything that happens is
going to be over very quickly.”
In the US, the number of Americans filing claims for
unemployment benefits fell last week, indicating that the labor
market remained in a “slow-hire, slow-fire” mode.
In China, the world’s second-biggest economy, producer price
inflation surged to a four-year high in June, piling pressure on
manufacturers’ profit margins as weak domestic demand limited
pricing power.