Oil prices fell on clues about Fed policy and rumors of a possible deal
Oil prices closed lower on Friday and declined throughout the week. The Fed chairman made statements hinting at the possibility of interest rate cuts later in the year. This decline in prices came as investors assessed clues about the Federal Reserve's policy on fighting inflation and rumors of a possible deal regarding shipments through the Strait of Hormuz.
Brent crude futures closed down 39 cents, or 0.43%, at $89.31 a barrel. WTI crude futures closed down 13 cents, or 0.16%, at $83.40 a barrel.
Throughout the week, Brent fell more than 5%, and WTI fell more than 4%.
Global commodity markets appear strong despite the ongoing Ukrainian attacks on Russian refineries. There are also rumors over the weekend of a possible deal to reopen the Strait of Hormuz.
The US-Israel-Iran conflict completed its sixth month on Friday.
Before the war began, oil flows through the strait, which accounted for 20% of global oil production, are expected to recover somewhat.
The weekly decline was likely due to the current volume and the increasing rate of flows that can exit the strait.
This week, the US announced what it called "the harshest sanctions in history" against Iran. Tehran said the sanctions were "an inhuman and hostile act" and had lost their effectiveness.
Mediators are stepping up their efforts to reopen the Strait of Hormuz. Following a Qatari envoy's insistence that Iranians respect freedom of navigation, Tehran agreed to set a number of conditions to restore normal traffic.
On Thursday, the number of commodity ships passing through the Strait of Hormuz was less than 17, compared to the previous day and below the 10-day average of 15. Preliminary data released on Friday showed that 17 commodity ships also passed through the Bab el-Mandeb Strait; 6 entering and 11 exiting.
A statement released on Thursday estimated total recent Gulf oil exports at 15 to 16 million barrels per day; this figure is 7 to 8 million barrels below pre-war levels, but 5 to 6 million barrels above the March lows.
Issues such as who will join and leave OPEC, how China's demand will be affected, and whether global refining problems can be resolved, are tied to this turbulent war.
According to sources, the US is working on a long-term deal to secure Venezuela's crude oil reserves. Officials in the Trump administration are working on an agreement to provide long-term access to a portion of Venezuela's crude oil reserves. This move could ultimately lower the cost of oil imports.
By the way, Venezuela is considering leaving the OPEC oil production group.
Separately, geopolitical tensions have escalated after Moscow warned it could attack British military targets inside and outside Ukraine in response to Kiev's attacks on Russian territory with British-made long-range cruise missiles.
However, Trump said that Russian President Vladimir Putin would not consider attacking a NATO country. Britain is a founding member of NATO.
The Ukrainian General Staff reported that Ukrainian troops attacked a Russian oil refinery in the Yaroslavl region overnight.
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