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Oil slides as traders scale back odds of Hormuz shipping deal
September WTI was recently at $78.08, down 10.1% for the week, after a rally attempt faded when Hormuz shipping issues were not resolved.
Oil prices fell sharply as traders reduced expectations that a diplomatic breakthrough would quickly reopen shipping through the Strait of Hormuz, OilPrice reported.
September WTI crude oil futures were trading at $78.08 early Friday, down $8.72, or 10.1% for the week, after opening at $80.10, topping out at $82.33 and dropping as low as $74.24. The outlet noted the weekly result was not final because Friday’s session was still under way.
The initial selloff was driven by optimism around talks involving Iran, Oman and the United States, with the market treating reports of progress as a path toward reopening Hormuz and releasing more Gulf crude. OilPrice said that pulled out a large amount of risk premium in a short period.
However, traders later bought back only part of the move when it became clear the shipping problem had not been solved. OilPrice added that even if a temporary arrangement is possible, it would not restore unrestricted shipping or give refiners confidence that cargoes will move on schedule, leaving the Strait of Hormuz as the central issue.
Latest closeWTI crude $78.07 ▲3.8%