By: Economy Middle East

Oil prices declined on Friday morning and remained on track for steep weekly losses as easing supply concerns outweighed renewed security risks in the Middle East. Brent crude futures slipped 1.74 percent, to $74.19 a barrel, while U.S. West Texas Intermediate crude fell 1.96 percent, to $70.51 a barrel.

Both benchmarks had gained more than 2 percent on Thursday after a cargo vessel was struck by an unidentified projectile near Oman, prompting the United Nations’ shipping agency to suspend its voluntary evacuation program.

Two U.S. officials told Reuters that Iran fired on the vessel as it attempted to transit the Strait of Hormuz, while Iranian authorities said the safety of ships operating outside designated navigation routes could not be guaranteed.

Hormuz recovery

Despite the latest security incident, markets focused on improving crude flows through the Strait of Hormuz. Data released on Thursday showed oil shipments through the strategic waterway climbed this week to their highest level since the U.S.-Israeli conflict with Iran began in February, following a ceasefire agreement that reopened the passage. The increase in tanker movements helped ease fears of prolonged supply disruptions, although total traffic remains well below the average of around 125 vessels passing through the strait each day before the conflict erupted. Brent and WTI crude are both on course to post weekly losses of nearly 7 percent as supply concerns continue to fade.

Supply risks

Elsewhere, fresh uncertainty emerged after earthquakes struck Venezuela on Thursday, raising concerns over the country’s oil production. Initial assessments indicated limited damage to the nation’s major oil fields, refineries, pipelines and export terminals, as most facilities are located far from the hardest-hit areas. However, widespread power outages have cast doubt on whether Venezuela can sustain production near its pre-earthquake level of approximately 1.2 million barrels per day, adding a new source of uncertainty to global energy markets.