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US Oil Update: Crude Holds Steady Ahead of Iran-US Talks

-- Crude oil futures were little changed in midday trading on Friday ahead of US-Iran talks in Islamabad on Saturday, which will dictate the path ahead for a fragile ceasefire as traffic through the Strait of Hormuz remains restricted.

Front-month West Texas Intermediate crude futures eased by 0.35% to $98.25 per barrel, while Brent futures were up 0.55% to $96.44/bbl.

On Saturday morning, the US and Iran delegations will commence the first round of in-person negotiations.

US President Trump said in a Truth Social post that the only reason Iranians are alive "is to negotiate", while noting that the only leverage Tehran holds is its ability to create short-term pressure by blocking the Strait.

"The Iranians don't seem to realize they have no cards, other than a short-term extortion of the World by using International Waterways," Trump said in a social media post.

Trump reportedly said the US is loading its warships with the "best weapons" in case the peace talks with Iran fail.

However, Iran said that blocked Iranian assets must be released and that a ceasefire must take hold in Lebanon before peace talks can proceed, throwing last-minute doubt with hours to go before the talks are scheduled to start.

Iranian Parliament Speaker Mohammad Bagher Ghalibaf said on Friday that two agreed-upon actions, a ceasefire in Lebanon and the release of Iran's blocked assets, must be implemented before negotiations begin.

Iran Foreign Minister Seyed Abbas Araghchi also reiterated that Lebanon should be included within the scope of the Iran-US two-week ceasefire agreement, stressing the need for Washington to adhere to its "commitments".

Meanwhile, ING analysts said while Trump struck an optimistic tone on resolving the six-week conflict, he threatened Tehran over charging fees in the Hormuz.

The latest shipping data shows that vessel activity through the Hormuz has increased slightly since the ceasefire took effect on Apr.8, but flows remain well below normal levels. MarineTraffic said 14 vessels crossed the Strait on Apr. 8-9, including nine crossings on 9 Apr.

"More than 130 million barrels of crude and condensate remain stranded across about 80 laden tankers, largely VLCCs, with key exporters including Saudi Arabia, Iraq and the UAE unable to move cargoes, Kpler strategists said in a note on Friday," Kpler strategists said in a note on Friday.

On the supply front, Saudi Arabia said on Thursday that Iranian attacks on its energy infrastructure reduced the country's oil production capacity and East-West Pipeline throughput by about 600,000 barrels per day and 700,000 b/d, respectively.

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