Oil posts third straight weekly loss on Fed, Hormuz signals

Crude oil prices closed lower on Friday, capping a third consecutive weekly decline as Federal Reserve Chairman Kevin Warsh warned of potential interest rate increases and speculation grew over a possible deal to reopen the Strait of Hormuz to normal shipping traffic.

Brent crude futures settled at $89.31 a barrel, down 39 cents or 0.43%, while West Texas Intermediate crude finished at $83.40, losing 13 cents or 0.16%. For the week, Brent fell more than 5% and WTI dropped over 4%.businesspost+2

Fed Signals and Hormuz Diplomacy Weigh on Markets

The sell-off was driven by two forces. At the Federal Reserve's annual Jackson Hole conference, Warsh — who replaced Jerome Powell in late May after his predecessor's term ended — said inflation remains "stubbornly above" the central bank's 2% target and suggested rate hikes may be needed in the coming months. Higher borrowing costs tend to slow economic activity and reduce oil demand.businesspost

At the same time, diplomatic efforts to restore shipping through the Strait of Hormuz intensified. Iran agreed to draft a list of conditions for resuming normal maritime traffic after a Qatari emissary pressed Tehran to respect freedom of navigation. Phil Flynn, senior analyst at the Price Futures Group, said there was "a lot of rumbling, rumours we might see a deal to reopen the Strait of Hormuz over the weekend".boldnewsonline+2

Gulf Flows Recover but Remain Fragile

The US-Israeli war with Iran entered its sixth month on Friday. Before the conflict, roughly 20% of global oil production passed through the Strait of Hormuz.boldnewsonline+1

Goldman Sachs ↗ 0.07% estimated that total Gulf exports had recently reached 15 million to 16 million barrels per day — still 7 million to 8 million barrels below pre-war levels but 5 million to 6 million barrels above the lows recorded in March. Rystad analyst Janiv Shah said markets had been caught off guard by unexpected oil flows through an Iran-Oman corridor and US mine-clearance operations.hokanews+1

Still, vessel traffic remained uneven. Only seven commodity vessels transited the strait on Thursday, down from 17 the day before and below the 10-day average of 15. The Energy Information Administration also reported a fourth consecutive weekly build in US crude inventories, adding further downward pressure.businesspost+2

Geopolitical Crosscurrents Persist

Washington announced what it called the "toughest sanctions in history" against Iran earlier in the week, which Tehran dismissed as "inhumane and hostile". Meanwhile, Ukraine's military struck a Russian oil refinery in the Yaroslavl region overnight, underscoring ongoing risks to refined-product supplies. Venezuela is also reportedly considering withdrawing from OPEC, a move that would add another layer of uncertainty for the producer group.blockonomi+2