Oil prices slip with Venezuela supply reports, Hormuz deal in focus

Oil prices experienced a slight decline on Friday as various factors came to light. The U.S. was reportedly close to gaining access to Venezuela’s oil reserves, according to recent reports. Additionally, the focus shifted to the ongoing negotiations between the U.S. and Iran regarding the Strait of Hormuz. Venezuela was also contemplating an exit from the Organization of Petroleum Exporting Countries (OPEC) amid its growing ties with Washington.

Brent oil futures experienced a 0.4% decrease, settling at $89.38 a barrel by 08:10 ET (12:10 GMT). West Texas Intermediate (WTI) crude futures also fell by 0.6%, reaching $83.01 a barrel. However, both contracts were expected to lose between 4% and 5.5% for the week. Despite a robust rebound on Thursday, both contracts continued their downward trend.

The Donald Trump administration seems to be inching closer to securing long-term access to a portion of Venezuela’s vast crude reserves, according to reports by Reuters. This proposed deal, which could be finalized soon, would enable the U.S. government to develop Venezuelan oilfields through American companies. While markets have been wary of potential supply increases resulting from U.S. control over Venezuela’s oil assets, analysts cautioned that any actual supply boost would require considerable time due to the extensive infrastructure development needed in Venezuela.

In a separate development, Venezuela is reportedly considering leaving OPEC due to its expanding relations with the United States. This potential exit would mark the second significant withdrawal by an OPEC member, following the United Arab Emirates' decision to leave the organization. The news of lower Brent and WTI futures prices was driven primarily by earlier reports of Iran and Oman agreeing to allow some traffic through the Strait of Hormuz.

Iran had stated it was preparing a list of conditions for the reopening of the waterway. The possibility of Hormuz's reopening had put downward pressure on crude prices, considering that the channel contributed to nearly a fifth of the global oil supply before the U.S.-Iran war. However, crude prices saw some relief in the form of a weekly decline on Thursday after reports emerged suggesting that Trump had no intention of returning to the June peace deal with Iran.

Tehran has repeatedly urged the U.S. to adhere to the terms of the June peace deal before engaging in further negotiations. This agreement had ended earlier in August.