Oil set for second weekly rise as unsettled US-Iran war disrupts supply

[SINGAPORE] Oil prices were little changed on Friday (Aug 21), but were on track for a second weekly rise as the stalemated US-Iran war continues to disrupt supply from the key Middle East producing region.

Brent crude futures rose US$0.04 to US$93.82 a barrel by 0142 GMT, after climbing 2.4 per cent in the previous session. US West Texas Intermediate crude futures slipped US$0.06 to US$86.78 a barrel, after climbing 2.3 per cent in the prior session.

During the previous five days of gains, Brent gained more than 7 per cent and WTI climbed more than 8 per cent, reaching their highest since Jul 24.

Prices have climbed on concerns the inconclusive state of the US-Israeli war on Iran will mean the continued curtailment of supply from major oil producers such as Saudi Arabia, Iraq, the UAE and Kuwait.

The earlier peace deal between them expired on Aug 17 with no effort by either side to restart talks and US President Donald Trump threatened economic retaliation against nations supporting Iran.

“Both sides are dug in but lacking the luxury of time to play the waiting game, against a backdrop of crude prices grinding unerringly higher,” IG analyst Tony Sycamore said on Friday.

On Wednesday evening, Trump threatened “economic warfare and isolation on an unprecedented scale” against Teheran, warning of consequences for any country that provided “any type of lifeline to Iran”.

On Aug 19, the United Arab Emirates suspended all financial and economic transactions with Iran until further notice, highlighting the fraught ties between the major Gulf Arab oil producer and Teheran.

Thousands of people have been killed in the Iran war, which began on Feb 28 when the US and Israel launched military strikes on Iran. Since then, Teheran’s blockade of the Strait of Hormuz and Iranian attacks on energy facilities across the Middle East have disrupted global oil and gas flows.

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Shipping traffic through the Strait of Hormuz on Wednesday was unchanged from the day before, far below pre-war levels, according to the latest shipping data.

Prior to the Iran war, shipments equal to about one-fifth of global consumption moved through the waterway. REUTERS