Oil prices gain but set for first weekly decline since start of Iran war

NEW YORK: Oil prices rose on Friday reflecting scepticism about prospects ​for a ceasefire in the month-old Iran war, but Brent crude was set for its ‌first weekly decline since February 9 after U.S. President Donald Trump said talks with Iran were going well while offering no details.

Brent crude futures rose by $3.51, or 3.3%, to $111.52 a barrel by 1:14 p.m. ET (1714 GMT). U.S. West Texas Intermediate ​futures were up $4.06, or 4.3%, at $98.54.

The Brent benchmark has jumped 53% since February 27, the day ​before the U.S. and Israel launched strikes against Iran, but was down over 0.5% this ⁠week. WTI, up 45% since the war began, was up marginally week-over-week.

Traders are cautious about Trump’s statements about the ​Iran talks. An Iranian official told Reuters that a U.S. proposal conveyed to Tehran by Pakistan was “one-sided and unfair”.

“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 his deadline for Iran ​to reopen the Strait of Hormuz or face the destruction of its energy infrastructure, the U.S. has ​also sent thousands of troops to the Middle East, with Trump weighing whether to use ground forces to seize Iran’s ‌strategic ⁠oil hub of Kharg Island.

“We look for the oil market to develop an immunity to Trump’s conciliatory comments and optimistic tone regarding a deal, especially given apparent intentions to send an additional 10,000 troops toward Iran,” oil trading adviser Ritterbusch & Associates said in a note to clients.

The Iran war has taken about 11 million barrels ​per day out of ​global oil supply, with ⁠the International Energy Agency describing the crisis as worse than the two 1970s oil shocks combined.

“Every day flows through the Strait remain restricted, more than 10 million barrels ​of oil are missing … tightening the oil market further,” said UBS analyst Giovanni ​Staunovo.

Analysts at ⁠Macquarie Group said that oil prices will fall quickly if the war begins to wind down soon but still remain above pre-conflict levels. However, prices could rise to $200 if the war drags on until the end of ⁠June, they ​added.

Elsewhere, Russian oil producers have warned buyers that they could declare force ​majeure on supplies from major Baltic Sea ports after Ukrainian attacks on Russian energy infrastructure.