Oil on track for biggest weekly loss in 10 months after truce

Oil prices are heading to record their largest weekly loss since last June, despite the slight gains achieved on Friday, amid renewed concerns regarding supplies from Saudi Arabia and oil flows through the Strait of Hormuz. 

Brent crude futures rose 56 cents, or 0.58%, to reach $96.48 per barrel by 09:20 GMT. 

U.S. West Texas Intermediate (WTI) crude futures also rose 65 cents, or 0.66%, to $98.52 per barrel. 

However, both contracts have lost about 11% to 12% this week after Iran and the United States agreed on Tuesday to a two-week truce mediated by Pakistan. 

But fighting continued regardless, and oil flows through the Strait of Hormuz remained severely restricted, which kept futures prices near the $100 per barrel level and pushed prices in the physical market to record levels. 

Shipping traffic through the strait remains less than 10% of its normal levels, after Tehran imposed its control by warning ships against leaving its territorial waters. 

Ole Hansen, an analyst at Saxo Bank, said that the strait is still practically under severe restrictions, and that the operation of the global oil system is far from normal, noting that futures markets are pricing in a partial return to normalcy, while the physical market reflects a sharp shortage in supplies. 

An official in Tehran told Reuters on April 7 that Iran is seeking to impose fees on ships for crossing the strait as part of a peace agreement, a proposal that was met with rejection from Western leaders and from the United Nations shipping agency. 

This vital maritime corridor for oil and gas flows has effectively been closed due to the conflict that began on February 28 when the United States and Israel launched airstrikes on Iran. 

Prices rose on Friday after the official Saudi Press Agency reported that attacks on Saudi energy facilities reduced the Kingdom's production capacity by about 600,000 barrels per day, and also reduced flows of the East-West pipeline by about 700,000 barrels per day. 

According to investment bank JPMorgan, about 50 infrastructure assets in the Gulf have been damaged as a result of drone and missile strikes during the nearly six weeks since the start of the conflict, leading to the halt of about 2.4 million barrels per day of refining capacity. 

Prices declined slightly on Friday after Lebanon announced its intention to participate in a meeting with representatives from the United States and Israel in Washington next week to discuss a ceasefire declaration in the parallel war that Israel is waging against Iran's Hezbollah allies inside the country.