Key facts
- Oil prices saw a slight increase on Friday before the US holiday weekend.
- Brent futures were up 0.1% to $71.87 a barrel, and WTI was down 0.09% to $68.63 a barrel.
- The market is showing cautious optimism regarding peace efforts between the United States and Iran.
- Kuwait's oil production rose sharply to 1.65 million barrels per day in June from 580,000 bpd in May.
- Saudi Aramco is speeding up sales in Asia by using spot pricing.
- Some shipping has resumed through the Strait of Hormuz.
Oil prices were little changed on Friday before a long holiday weekend in the U.S., as traders held on to hopes that attempts to secure peace in the Middle East between the United States and Iran would succeed. Brent futures climbed 7 cents, or 0.1%, to $71.87 a barrel, while West Texas Intermediate was down 6 cents, or 0.09%, to $68.63 a barrel. U.S. markets were closed on Friday for the Independence Day holiday.
During the prior session, both benchmarks hit their lowest levels since before the U.S.-Israeli war on Iran began in late February. Brent for the week was down 0.16% and WTI down 0.87%, marking the smallest weekly movements for both in months. Market analysts noted guarded optimism, with the market wanting to believe peace efforts will hold but hedging its bets until real evidence emerges.
Some shipping has resumed through the Strait of Hormuz, a critical waterway, following an initial deal between Iran and the United States. However, uncertainty remains high after recent exchanges of strikes. In response to the prospect of increased oil shipments, Gulf producers are working to boost output. Kuwait's oil production rose sharply to 1.65 million barrels per day in June from 580,000 bpd in May. Additionally, at least five supertankers carrying 10 million barrels of Saudi oil have exited the Strait of Hormuz, and Saudi Aramco has switched to spot pricing from longer-term contracts to expedite sales in Asia. The market structure has shifted from backwardation to contango, indicating decreased expectations of future shortages, coinciding with continued U.S. Strategic Petroleum Reserve releases.