(RTTNews) – Partially offsetting the gains from five consecutive sessions, crude oil prices have plunged on Friday as investors opted to book profits made from the recent trades. While U.S. President Donald Trump threatened to intensify attacks on Iran, investors analyzed the impact of a likely output increase by the Organization of Petroleum Exporting Countries.
WTI Crude Oil for September month delivery was last seen trading down by $2.99 (or 3.24%) at $89.20 per barrel.
The Middle East conflict that started on February 28 between the U.S. and Iran is continuing to rattle oil and energy markets.
Both nations signed a Memorandum of Understanding, agreeing to find ways to settle their disputes only through negotiations. However, amid incidents of the Iranian military firing at ships transiting via the Strait of Hormuz, U.S. forces recommenced their attacks on Iran.
In retaliation, Iran continues to target the U.S. bases in the gulf region.
The closure of the Strait of Hormuz by Iran after the MoU failed to hold, resulted in huge supply disruption concerns and crude oil prices have skyrocketed since then.
Tensions escalated further after Iran-backed Houthi rebels in Yemen attacked two Saudi Arabian tankers in the Red Sea, opening a possible new front to the conflict.
U.S. President Donald Trump announced that if the Houthis attack any ship again, Iran will be held responsible and will suffer a major military punishment. Trump termed the Houthi militant group a proxy of Iran.
In an interview with Axios, Trump stated that Iran is yet to see the full might of the U.S. Trump remarked that he is considering restarting major combat operations against Iran.
Later through Truth Social, Trump announced that for every ship or cargo destroyed from now on by the Iranian military, the U.S. will utilize Iranian assets frozen in foreign nations as compensation for the damages.
Iran’s Foreign Minister Abbas Araghchi strongly condemned Trump’s plan, calling the move an incendiary precedent. Araghchi stated that the ensuing chaos will not be pretty or peaceful, hinting at forceful retaliatory strikes.
Reportedly, Iranian assets worth $100 to $120 billion (and possibly even more) are frozen in foreign nations though there is no official estimate.
Reuters cited Kpler’s data as showing that only three vessels passed through the Strait of Hormuz from July 22 to July 24.
According to Kpler’s data, vessel transits through the Bab el-Mandeb strait totaled 32 on July 23, up from 26 on July 22.
With the interim MoU signed between the U.S. and Iran on the verge of collapse, the Organization of Petroleum Exporting Countries are meeting on August 2.
Citing sources, Reuters reported that the cartel will likely agree to announce a further hike in output targets from September, by about 188,000 barrels per day, the same as for June, July, and August.
However, energy experts are doubtful if the alliance would achieve the set target as several gulf producers refrained from oil exports due to the ongoing shipping disruption through the Strait of Hormuz.
The recent Houthi attacks on Saudi Arabian tankers have further compounded the supply disruption concerns.
Kazakhstan is cutting production after a shutdown on tanker loadings due to drone attacks at the Caspian Pipeline Consortium terminal. Russia faces disruptions due to Ukrainian drone strikes on its refineries.
After yesterday’s unemployment claims data showed a resilient labor market, some economists expect the U.S. Federal Reserve to hike interest rates at its upcoming meeting on July 28-29.
The U.S. dollar index was last seen trading at 101.46, up by 0.01 (or 0.01%) today.
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