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US Oil Update: Futures Slide as Vessels Continue Transiting Strait of Hormuz

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Crude oil futures fell in midday trading on Friday, extending a week of losses as the resumption of tanker traffic via the Strait of Hormuz eased fears over a global supply crunch that had gripped energy markets for months.

Front-month West Texas Intermediate crude futures tumbled by 3.4% to $69.44 per barrel, while Brent futures retreated by 4.2% to $72.17/bbl.

Saxo Bank strategists said oil was on track for a weekly decline after transits through the Strait of Hormuz accelerated, although an attack on a cargo ship off the Omani coast has renewed concerns about safe passage through the key chokepoint.

President Trump on Friday alleged that Iran had violated the ceasefire agreement by firing at cargo ships transiting the Strait, saying at least four one-way attack drones targeted ships in the waterway and one of them hit the upper deck of a large cargo ship.

On Thursday, the United Kingdom Maritime Trade Operations, or the UKMTO, reported that a vessel had been struck by an unknown projectile off the coast of Oman in the Hormuz, prompting the International Maritime Organization to suspend its evacuation operations.

Meanwhile, two key exit routes through the Strait have reportedly emerged, as the usual middle route is believed to have been mined.

However, Iran's Islamic Revolutionary Guard warned vessels that any new transit route via the Hormuz established without coordination with Tehran is "unacceptable and dangerous".

Iran's Persian Gulf Strait Authority also said on Thursday that any transit happening in routes outside its framework would not be protected by "safe-passage guarantees."

On the supply front, the total crude oil, natural gas, and miscellaneous rigs count rose by 10 in the week to June 26, according to data from Baker Hughes (BKR) released Friday.

The US oil rig count rose by seven from 433 the previous week to 440, while the number of gas rigs increased by three from 122 the previous week to 125, the data showed.

Baker Hughes said this week's increase puts the consolidated North American oil and gas rig count, a key early indicator of future production levels, at 770, up 21 rigs from the previous week.

Saudi Arabia has also begun loading tankers at its key Ras Tanura terminal in the Persian Gulf as Gulf producers ramp up output, according to media reports.

Soojin Kim, research analyst at MUFG, said Gulf producers, including the UAE, Kuwait, Qatar, and Iraq, are ramping up production and exports, helping restore regional supply.

Fewer vessels transited the Hormuz than earlier in the week, with the latest data shipping data from Kpler showing 54 verified crossings across a broad mix of commercial and energy-linked vessels on June 25.

On Friday, Kpler said that the QatarEnergy-chartered Umm Slal has become the latest LNG tanker to reverse course near the strategic waterway, following a similar move by Gaslog Shanghai on June 25.

The reversals coincided with warnings from Iran's IRGC that vessels must avoid unauthorized routes and use only corridors designated by Tehran, Kpler said.

Price: $56.51, Change: $-0.43, Percent Change: -0.76%

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