Oil prices pared losses but still ended lower on Friday after European nations agreed to release additional diesel and crude stocks, easing concerns over tight global energy supplies.
EU countries discussed a French proposal to release additional diesel stockpiles, in response to US pressure on European nations to unleash more supplies in an attempt to reduce surging fuel prices, Reuters reported, citing sources.
In a call on Friday, EU countries' governments discussed a French proposal for European countries to release 50 million barrels of diesel, and for International Energy Agency members to release 50 million barrels of crude oil, it added.
US President Donald Trump had previously said he was mulling a ban on US diesel exports.
Brent, the benchmark for two thirds of the world's oil, was nearly flat at $102.25 a barrel, after falling below the $100 mark. West Texas Intermediate, the gauge that tracks US crude, shed 1.9 per cent lower to settle at $91.11 a barrel.
Brent and WTI traded more than 3 per cent and 4 per cent, respectively, earlier in the session. Prices stabilised in morning trade, having rallied more than 4 per cent in the previous session, as traders weighed the possibly of renewed Iran war hostilities against surging supplies from the Strait of Hormuz.
From last week's close, Brent slid nearly 2 per cent, while WTI gave up 1.4 per cent.
“Shipping-related reassurance around the Strait of Hormuz and a possible opening on Iranian nuclear inspections weighed on prices, but renewed US military deployments to the region kept the risk premium alive,” said Daniel Richards, senior economist at Emirates NBD.
Brent remained volatile on Thursday, opening lower but rallying more than 4 per cent intraday before closing down 1.2 per cent at $102.3 per barrel on supply improvement signals from the Middle East.
The two benchmarks are heading towards different price trajectories, with Brent projected to post a weekly loss while WTI is set for a weekly gain.
Oil flows through the Strait of Hormuz rose to their highest level last month since the Iran war began, as Saudi Arabia was forced to send more crude through the contested waterway after Houthi attacks restricted its Red Sea route.
Saudi shipments through Hormuz jumped to 2.9 million barrels per day in September from around one million bpd in August, preliminary Kpler data showed.
The kingdom sent 7.3 million bpd to global markets in February, which plummeted to 1.3 million bpd in March following US-Israel strikes on Iran.
Saudi Arabia, Opec’s biggest producer, is boosting supplies through Hormuz after the East-West pipeline that runs from Abqaiq in the eastern province to Yanbu oil terminal on the Red Sea coast was shut following Houthi drone attacks on September 10. The pipeline, with its seven million bpd capacity, was partially reopened on September 22.
Houthi rebels also announced a maritime embargo on Saudi shipping in July that is restricting the kingdom's flow of oil through the Bab Al Mandeb strait.
Hostilities in the Middle East have also affected oil prices, with the US disclosing plans to send a third aircraft carrier strike group to the Middle East.
A US official told The National on Thursday the USS Theodore Roosevelt was on its way to Central Command's area of operations, which spans the Middle East.
The Nimitz-class, nuclear-powered ship is accompanied by its carrier strike group, made up of several craft. A separate amphibious group carrying more than 2,000 US Marines has also departed for the region.
“Though flow out of the Middle East, at least for crude, is normalising, upwards pressure on prices continues as geopolitical risk persists,” said Kyle Rodda, senior financial market analyst at Capital.com.
“That risk premium increased last night off the back of reports the US could be preparing to deploy another aircraft carrier.”
This comes against the backdrop of US releasing more oil from the country's emergency stockpile in an effort to contain rising fuel prices due to energy supply disruption from the Iran war.
This week, the Energy Department said it was offering to loan energy companies up to 40 million barrels of crude oil from the Strategic Petroleum Reserve. The offer represents the last of the drawdown of 172 million barrels from the reserve ordered in March.
Traders are also keeping a close eye on the Opec+ meeting scheduled for Sunday, with the member countries expected to keep their oil production targets steady for November.
Gold, meanwhile, posted a more than 3 per cent weekly drop on a stronger dollar and as expectations that the US Federal Reserve will keep rates steady at its next meeting grew.
The precious metal, widely considered a safe-haven asset, dropped 0.76 per cent to $4,140.80 an ounce, reversing gains earlier in the session.
