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WTI holds near $72 as US-Iran de-escalation hopes support crude
WTI was up 0.4% on the day but stayed in consolidation after a more than two-week high, as US Iran military and insurance risks continued to weigh.
WTI crude traded around $72 on Friday, up 0.42% on the day, but remained range bound after hitting a more than two-week high earlier in the week, according to FXStreet.
Sentiment improved slightly after a US official confirmed technical talks with Iran are still ongoing despite comments from President Donald Trump that a memorandum of understanding with Tehran was no longer in effect. Reuters also reported that Qatari negotiators are in Iran seeking to de-escalate tensions and set conditions for further talks, in coordination with the United States.
Even with diplomatic progress, the geopolitical risk premium remained in place as strikes between the United States and Iran continued, keeping concerns about potential energy supply disruptions alive. Rabobank said oil traffic through the Strait of Hormuz remains significantly below normal levels and war risk insurance costs are rising, which could limit downside.
On the fundamentals, the International Energy Agency expects global oil demand to rise by 1.2 million barrels per day year over year in the fourth quarter. The IEA also projected supply growth this year if transit conditions improve, while it lowered its outlook for Russian oil production due to attacks on the country’s energy infrastructure.
Investors continued to weigh the broader macro picture, including expectations that the Federal Reserve may keep interest rates higher for longer, which could weigh on economic growth and oil demand, even as the Middle East remained the main driver near term.
Latest closeWTI crude $71.84 ▼2.3%