Oil prices set for weekly gain as US-Iran hostilities intensify

Oil prices set for weekly gain as US-Iran hostilities intensify Sept 4 : Oil prices eased on Friday but were still headed for a weekly gain as rising U.S.-Iran tensions heightened concerns over Middle East supply risks. Brent crude futures were down 47 cents or 0.49 per cent at $95.05 a barrel by 0813 GMT, while U.S. West Texas Intermediate crude futures lost 64 cents, or 0.70 per cent, to $90.66. However, Brent rose 6.5 per cent for the week, its biggest weekly gain since August 17, while WTI climbed 8.8 per cent, its strongest weekly performance since July 13. U.S. attacks this week that killed and wounded dozens, including Iranian civilians, marked the fiercest clashes between the two countries since July. The war is in its seventh month since beginning with U.S.-Israeli strikes in late February. Israeli Defence Minister Israel Katz renewed warnings that Israel would "cripple" Iran's military and civilian infrastructure, including energy facilities. A U.S. campaign to throttle Iran's economy by blockading its oil exports and stopping sanctions evasion is growing increasingly difficult to withstand, three senior Iranian sources said. "The combination of renewed U.S.-Iran hostilities and ongoing uncertainty around the Strait of Hormuz has been enough to reprice risk higher, even while actual tanker flows have not collapsed," said Tim Waterer, chief market analyst at KCM Trade. Four commodity vessels transited the key Strait of Hormuz waterway on Thursday, down from nine a day earlier and well below the 10-day average tally of about 15, preliminary shipping data showed. Iraq increased its August oil exports to about 2.34 million barrels per day from about 1.35 million bpd in July, two Iraqi energy officials said on Wednesday. Analysts turned more bullish on prices as concerns grew over the Strait of Hormuz, a key chokepoint that handled about one-fifth of global oil and liquefied natural gas supplies before the conflict began in late February. Citi raised its average Brent crude price forecast for the third quarter to $86 a barrel from $80, saying the reopening of the strait is taking longer than previously expected. ANZ analysts also raised their Brent crude forecast on Friday to $95 a barrel in the short term, with upside risk if the Middle East conflict intensifies. Elsewhere, fear of supply disruptions due to renewed hostilities between the U.S. and Iran and attacks on Russian refineries by Ukraine pushed average U.S. diesel prices to record highs.