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US Oil Update: Futures Rise as Markets Weigh Iran-Oman Talks, Weak US Jobs Data

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Crude futures climbed in midday trading on Friday as markets weighed progress in talks between Iran and Oman to restore shipping via the Strait of Hormuz, while weaker-than-expected US jobs data tempered expectations for fuel demand growth in the world's largest crude consumer.

Front-month West Texas Intermediate crude futures rose by 1% to $78.08 per barrel, while Brent futures advanced by 1.1% to $83.40/bbl.

Gelber & Associates said that a proposed two-lane shipping arrangement has eased immediate disruption concerns, although unresolved US-Iran tensions and renewed Houthi threats in the Red Sea are keeping a geopolitical premium in the market.

UAE's Adnoc said on Friday that three of its vessels were attacked while transiting Hormuz this week, bringing the total number of its vessels targeted since the conflict began to 15.

On Thursday, Iran's speaker of Parliament, Mohammad Baqer Qalibaf, alleged that President Trump had staged "theater diplomacy," as Washington and Tehran offer conflicting accounts of bilateral engagement aimed at ending their months-long hostilities.

Iran and Oman are currently working on an agreement to define transit routes through the Strait.

An Iranian lawmaker on Thursday reportedly said a parliament committee is reviewing a preliminary bill to ban US, Israeli and other vessels deemed hostile from the Hormuz, and fine violators of the proposed restrictions up to a fifth of cargo value.

The plan, according to local media reports, would also bar Israeli cargo and related vessels. The restrictions will extend to "countries and individuals that have caused damage to Iran" until that harm is "compensated."

The structure of the Iran-Oman agreement in its current form, and the power it yields to Iran, is nothing Trump can accept politically, Bjarne Schieldrop, chief commodities analyst at SEB Research, said, adding that the US President's options are shrinking.

The Middle East conflict appears to be widening after Yemen's Houthis attacked a Saudi oil tanker, the Wafa, in the northern Red Sea off the coast of Yanbu on Wednesday.

Traffic through the Middle East energy chokepoints diverged, with Kpler data showing 8 confirmed crossings in the Hormuz, down 33%, while crossings via Bab el-Mandeb rose 18% to 26.

ING strategists said that flows via the Hormuz will start to normalize through Q3, while forecasting Brent prices to average $80/bbl this quarter. However, there's plenty of risk and uncertainty to this view, the analysts said.

Capping the gains, the latest data from the Bureau of Labor Statistics showed that the US economy lost 139,000 jobs in July, compared with a downwardly revised 20,000 for the previous month.

The unemployment rate slipped to 4.1% as the labor force participation rate fell further to 61.4%.

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