Oil Prices Dip as Trump Signals De-escalation with Iran, but Regional Tensions Keep Markets Volatile

Oil prices are trending towards their second consecutive weekly decline as concerns over supply have eased. This shift follows signals from US President Donald Trump indicating a reluctance to reignite conflict with Iran. However, ongoing attacks on vessels in the region continue to contribute to price volatility.

Brent crude, the global benchmark, saw a 0.24 per cent decrease, trading at $95.59 a barrel as of 8:53 am UAE time. West Texas Intermediate (WTI), the US crude benchmark, was down 0.54 per cent at $88.26 a barrel. Both benchmarks are on track for a weekly drop exceeding 2.5 per cent, following a significant plunge of approximately 13 per cent last week.

President Trump indicated this week that he does not intend to resume hostilities with Iran, particularly after his Republican Party experienced substantial losses in the midterm elections. Furthermore, he stated on Thursday that the US is no longer pursuing an agreement with Tehran. "We don’t need a deal with Iran. Those days have long since passed. We’ve got their money, hundreds of billions of dollars, and we’ve got their strait," Mr Trump commented on Truth Social.

Despite these statements, attacks persist on ships traversing the Strait of Hormuz, a critical chokepoint for approximately two-thirds of global crude supply and liquefied natural gas. These incidents continue to exert upward pressure on oil prices due to supply risks. This week, Iran's Islamic Revolutionary Guard Corps claimed explosions occurred on two supertankers carrying over four million barrels of oil within the strait. Additionally, a tanker was struck by a projectile while en route east in the Arabian Gulf, resulting in reported casualties, according to the UK Maritime Trade Operations agency.

Attacks on Saudi energy infrastructure by Yemen's Houthis are also contributing to higher prices. A Houthi spokesperson, Yahya Saree, stated that a pumping station on the kingdom's East-West oil pipeline and the Yanbu oil installation on the Red Sea coast were targeted on Thursday. Saudi Arabia has been utilizing the pipeline for a significant portion of its crude exports since the war's commencement, due to disruptions in the strait.

In related market news, gold prices saw an increase on Friday, recovering from a more than one-year low reached in the previous session. Spot gold climbed 1 per cent to $3,917.70 per ounce at 9:55 am UAE time. Gold prices had fallen below the $4,000 mark amid market expectations of an interest rate increase by the US Federal Reserve in December.