Oil prices on track for weekly gain amid Middle East supply worries

 Oil prices fell on Friday, but stayed on pace for a weekly gain, as concerns swirled around Middle East supply flows and a bigger-than-expected draw from U.S. inventories.

Benchmark Brent oil futures slid by 0.1% to $105.78 a barrel by 09:32 ET (13:32 GMT), while U.S. West Texas Intermediate crude futures were mostly unchanged at $97.98 a barrel.

For the week, Brent was last trading up 1.0%. WTI futures were set to add 6.6% this week, after having rallied sharply on Thursday following data showing a deep drawdown in U.S. oil inventories last week. 

“Oil remains well-supported. A pattern has set in: prices slide early in the session, then claw back most of those losses by the close,” analysts at ING said in a note.

Among a host of factors playing into oil prices, investors were assessing a recent report that the U.S. was considering easing sanctions on so-called shadow fleet vessels that transport oil and derivatives from sanctioned countries such as Russia, Iran, and Venezuela. The measure aims to bring down global freight rates and help cool runaway fuel prices, although whether it would proceed is unclear.

The U.S. has also announced a major diesel supply deal with Russia. Diesel supply disruptions were in focus after Ukraine said it will resume attacking Russia’s energy infrastructure, despite U.S. President Donald Trump’s attempts to forge an energy ceasefire between the two countries. 

Separately, the International Energy Agency agreed on Thursday to release over 20 million barrels of diesel, and signaled it will speed up the release of any oil remaining from an emergency reserve release pledged in March.

The moves are designed to cool diesel prices, which soared to record levels due to supply disruptions in Russia and the Middle East. 

In the Middle East, Iran has continued to attack ships transiting the Strait of Hormuz, while Saudi Arabia and the Houthis have traded attacks. Still, shipping data cited by media reports suggest that regional exports have been resilient since approaching pre-war levels last month.

However, the IEA warned that global diesel markets could remain tight well into 2027. The group also projected a decline in global oil demand this year.