Investing.com – Oil prices plunged for the week, with the U.S. benchmark losing its most in six months, amid worries that there was too much crude supply in the market despite signs that risks from the U.S.-Iran conflict was far from over.
West Texas Intermediate, the benchmark for U.S. crude, settled down 52 cents, or nearly 1%, at $59.04 per barrel, remaining under the key $60 support. It was down 6.4% on the week, its sharpest weekly loss since June 30.
Brent, the global benchmark for crude, also broke below the psychologically important $65 per barrel mark. It was down 42 cents, or 0.6%, at $64.95 by 3:38 PM ET (20:38 GMT). For the week, Brent was down more than 5%, its sharpest weekly loss since the end of September.
Oil prices have been under pressure since Wednesday after President Donald Trump refrained from responding to Tehran’s rocket attacks on U.S.-Iraqi airbases after the U.S. killing of Iranian General Qassem Soleimani.
Prior to that stand-down, crude had been on a strong rally, with WTI hitting an April high of $65.65 and Brent surging to near four-month peaks of $71.28, on speculation about an all-out U.S.-Iran war.
Even media reports out of Beijing on Thursday confirming that China will sign the phase one trade deal with the United States next week couldn’t get oil higher.
The United States rolled out harsher sanctions on Iran on Friday, targeting the Islamic Republic’s multi-billion-dollar metals Industry, as part of the White House’s “maximum pain” campaign aimed at crippling Tehran’s possible nuclear bomb ambitions.
Iran’s Revolutionary Guards commander has also vowed he would take “harsher revenge” on the United States after the raid on the airbases, which did not kill any U.S. servicemen.
While the U.S. killing of Soleimani did not directly impact oil production and shipment, crude traders had initially priced in a higher element of risk into the market on fears that Tehran would do more to avenge his death. Both Iran and Iraq are members of OPEC, which together with Saudi Arabia, account for about 40% of the world’s oil production. On Wednesday, crude tankers deliberately avoided the Strait of Hormuz around Iran to be on the safe side, traders said.
“I can see the roll-down continuing here in the front end of WTI for the time being,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C. “On the Brent side, I think there are signs that the market could see some additional strength in spreads. Other than that, I expect the market to remain quiet.”