-- Global oil benchmarks ended the week in negative territory on Friday, as a volatile mix of military escalation in the Strait of Hormuz and tentative hopes for a diplomatic breakthrough kept markets on edge.
West Texas Intermediate settled at $94.68/bbl, down from $102.50/bbl the previous week, while Brent closed at $100.14/bbl, compared with $109.20/bbl a week earlier.
WTI registered a weekly loss of 6.4%, while Brent declined 7.42%.
Despite late-week price spikes driven by renewed fire exchanges, both benchmarks still ended the week lower, weighed down by earlier optimism that a 14-point US-Iran peace memorandum could eventually reopen global shipping lanes.
The week began with the US military launching "Project Freedom" to escort commercial vessels through the blockaded Strait of Hormuz.
This move triggered immediate Iranian missile and drone strikes against UAE infrastructure and transit vessels, with Tehran claiming the operation violated restricted zones.
The Strait of Hormuz remains effectively closed, with renewed clashes between US and Iranian forces reducing the prospect of a near-term reopening, Saxo Bank strategists said.
On Friday, the UAE Defense Ministry said Friday its air defenses engaged two ballistic missiles and three drones launched from Iran, the third time this week that it has fired on the UAE.
While the US subsequently drafted a UN Security Council resolution to safeguard navigation, President Donald Trump's mid-week announcement of "great progress" on a peace deal briefly calmed the market.
Prices retreated as Washington paused its escort missions to allow Tehran time to review a one-page memorandum of understanding intended to end the conflict.
However, sentiment was later challenged by a tightening supply picture in the US.
The Energy Information Administration reported a 2.3-million-barrel drawdown in US crude inventories, bringing stocks to 457.2 mmbbls.
Market analysts noted that US refineries are increasingly reliant on domestic stocks to offset the prolonged disruption to Middle Eastern supply, pushing US crude exports to 4.75 million barrels per day.
Volatility surged again by Thursday after reports emerged of Iranian missiles targeting US Navy vessels and explosions near Bandar Abbas.
The escalation followed a US Treasury move to sanction Iraq's deputy oil minister for allegedly helping Iran bypass embargoes.
While these flashes of conflict forced prices higher in the final sessions, they were insufficient to erase the cumulative losses of a week defined by the market's search for a diplomatic floor.
Saxo analysts added that the International Energy Agency has pegged regional supply losses at about 14 million barrels per day, "only partly offset by surging US exports, strategic reserve releases and demand destruction."
Weekly US oil product exports hit a record high, according to EIA data.
US exports of total petroleum products hit a record 8.2 mmb/d in the week ending May 1, the highest level since the Energy Information Administration started reporting the product export data in February 1991.
The weekly figure is up from 7.7 mmb/d a week ago, according to the EIA.
Total weekly US crude oil and petroleum products exports stood at 12.97 mmb/d, down from 14.18 mmb/d a week prior, driven by a sharp drop in crude exports, EIA data showed.
Weekly crude exports were at 4.8 mmb/d, down from 6.4 mmb/d the previous week.
Meanwhile, the US oil rig count rose by two from 408 the previous week to 410 in the week ending May 8, according to data from Baker Hughes (BKR) released Friday. That compares with 467 oil rigs in operation a year earlier.
The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by two to 672 from 670 the previous week.
Money managers in the WTI crude futures and options markets maintained their net long positions in the week ended May 5, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released on Friday.
The data showed that money managers reported 214,039 long positions, down 5,611 from April 28, while short positions were down 2,066 to 82,083.