Oil prices fall more than 1% on greater flows despite US-Iran war

Brent futures fell $1.03, or 1.2%, to $88 a barrel by 0215 GMT, while US West Texas Intermediate (WTI) crude slipped $1.50, or 1.8%, to $82.09 a barrel

Oil prices fell on Friday but kept on track for a monthly rise of about a fifth, as ​more supplies flowed through crucial maritime chokepoints, despite a ​lack of major breakthroughs in talks between the United States ‌and Iran.

Brent futures fell $1.03, or 1.2 per cent, to $88 a barrel by 0215 GMT, while US West Texas Intermediate (WTI) crude slipped $1.50, or 1.8 per cent, to $82.09 a barrel. On a monthly basis, both benchmarks were set to rise about 20 per cent.

Crude oil is edging lower as rising tension West Asia tension is being offset by signs of increased flows in the Strait of Hormuz, said Daniel Hynes, analyst at ING.

 

The strait, which usually carries about a fifth of global shipments of ‌crude oil and liquefied natural gas, has been a focal point for oil markets as it has been largely blockaded since the February 28 launch of the US-Israel war on Iran.

Saudi Arabia seeks to lead a coalition to boost defence cooperation in the Bab El-Mandeb Strait, the Red Sea and the Gulf of Aden, all chokepoints ​for energy supplies.

The Saudi defence ministry said 14 nations, including Djibouti, Egypt, Pakistan, Sudan and ‌Turkey, were in support of the multinational maritime defence coalition.

Iran-aligned Houthi militants in Yemen declared a naval blockade last week ​on ‌Saudi Arabia, threatening the Red Sea route for its oil exports, an alternative ‌to the Strait of Hormuz.

Although tanker traffic has continued through the Strait of Hormuz and the Red Sea, higher security risks have ‌boosted ​freight costs and ​insurance premiums to embed a significant geopolitical risk premium in oil prices, said Priyanka Sachdeva, analyst at Phillip Nova.

"While prices eased ‌from recent ​highs, the broader trend remains constructive," Sachdeva said.