Oil futures rose Friday, but were on track for a weekly loss as they retreat from nearly 14-year highs as traders assessed potential efforts to replace Russian crude on the global market in the wake of Russia’s invasion of Ukraine.
A pause in talks aimed at returning Iran to an international nuclear accord and reports that a drone attack on a Saudi Aramco refinery in Ryadh by Iran-aligned Houthi rebels helped lift crude in Friday’s session.
May Brent crude
the global benchmark, was up 93 cents, or 0.9%, at $110.26 a barrel on ICE Futures Europe. WTI was headed for a weekly loss of more than 7%, while Brent was down 6.7%. Both benchmarks closed Tuesday at their highest since 2008.
The oil market has seen volatile swings this week, surging as the U.S. moved to ban imports of Russian crude, raising the specter of broader Western sanctions against Russian energy that would leave a massive hole in the global supply/demand balance.
Remarks by Russian President Vladimir Putin on Wednesday pledging the country would continue to meet its export commitments helped put some pressure on crude, said Carsten Fritsch, commodity analyst at Commerzbank, soothing worries Moscow could move to shut off exports altogether in retaliation for far-reaching financial sanctions by Western countries.
Remarks earlier this week by the United Arab Emirates’ ambassador to the U.S. expressing a willingness to see the Organization of the Petroleum Exporting Countries boost output were also a factor, even though the U.A.E.’s energy minister subsequently contradicted the ambassador, Fritsch said. The remarks nonetheless have initiated a debate, the analyst said.
“Oil producers in the U.S. now appear to be reacting to the significantly higher prices after all and are stepping up their output, as the latest forecasts from the U.S. Energy Information Administration show. At the same time, the [International Energy Agency] has signaled its willingness to release further oil from emergency reserves if necessary,” he said.
The Iranian nuclear talks in Vienna paused without a deal on Friday, following Russian demands for guarantees from Washington that would prevent Western sanctions on Moscow stopping Russia doing business with Iran.
Iran, the U.S. and other world powers have been negotiating how to revive the 2015 nuclear deal, which lifted most international sanctions on Iran in exchange for tight but temporary restrictions on Tehran’s nuclear work. The Trump administration withdrew the U.S. from the accord in 2018, reimposing sanctions on Tehran, with Iran subsequently breaching the terms of the agreement.
A military spokesman for the Houthi movement said it had targeted a Saudi Aramco refinery in Riyadh using three drones, Reuters reported. Saudi state news agency SPA on Thursday reported that a drone had attacked a Riyadh refinery but didn’t disrupt petroleum supplies.