Oil prices set for second weekly decline as Trump to stay with Iran blockade

Oil prices experienced a mixed day on Friday, with expectations of a second weekly decline due to the US's continued blockade of Iran. This move aimed to minimize the likelihood of large-scale conflict in the Middle East, which could have disrupted oil supplies. However, the threat of attacks on shipping remained a concern. Brent futures remained stable, down only 1 cent to $95.41 a barrel, while West Texas Intermediate (WTI) fell by 20 cents, or 0.25%, to $88.52 a barrel.

The recent price declines came after two days of gains, as traders reacted to a volatile trading week. Early hopes for a reconciliation in the US-Israel conflict with Iran faded, replaced by Yemen's Houthis attacking Saudi Arabian infrastructure and attacks on tankers transporting crude from the Gulf. Despite the fluctuations, Brent is projected for a 2.4% drop this week, following a 16% decline the previous week, while WTI is expected to decline by 2.5%, after previously dropping 13%.

The overall decline in prices over the past two weeks suggests that oil prices have been accurately priced, according to Chris Brankin, a global advisor at Melbourne-based brokerage MiTrade. He noted that while prices have slightly rebounded, the trading community remains closely monitoring developments in the Middle East. Nonetheless, risks persist for oil shipments through the Strait of Hormuz, the primary waterway for crude exports from the major Middle Eastern producers.

On Thursday, Iran reported that four oil tankers had been hit by explosions in the Strait of Hormuz following a warning. However, Reuters was unable to independently verify these claims. During the same day, Yemen's Houthis claimed responsibility for attacking a pumping station on the Saudi East-West oil pipeline, an oil facility in the Red Sea city of Yanbu, and an Aramco building in Riyadh.

These ongoing threats, coupled with a rise in US crude and fuel inventories, added pressure to oil prices. Inventories increased by 4.7 million barrels to 414.4 million barrels in the week ending November 6, according to the Energy Information Administration, surpassing analysts' expectations in a Reuters survey, which forecasted a 1.1 million-barrel draw.