Oil set for third straight weekly decline as oil executives call for cautious return to Red Sea navigation

Oil prices rose on Friday after new sanctions were imposed on Iran’s crude exports but were on track for a third straight week of decline, hurt by U.S. Meanwhile Oil executives have called for a return to navigation through the Red Sea en route to the Suez Canal following a halt in attacks by Iran-backed Houthi rebels, but said firms were cautiously monitoring shipping conditions and competitors. A Liberian-flagged oil tanker that was attacked last year sailed through the red sea this week, the Suez Canal said on Monday, in one of the first voyages since the Houthi rebels last month said they would limit attacks on commercial vessels to Israel-linked ships until the Gaza ceasefire is fully implemented. After that, the Houthis would stop targeting Israeli-linked ships.
“Everyone is watching each other to see who goes first,” Barbara Harrison, vice president of crude supply and trading at U.S. major Chevron , said at an oil conference in Houston. The Houthis have carried out more than 100 attacks on ships since November 2023 and have sunk two vessels, seized another and killed at least four seafarers in what they say is solidarity with Palestinians in Gaza. The intensity of the attacks disrupted global shipping, particularly last year, and prompted navigation changes, with many vessels taking long routes around the southern tip of Africa and others increasing demand to pass the Panama Canal. The chief trading officer of the State Oil Company of Azerbaijan (SOCAR), Taghi Taghi-Zada, said at the same conference that an increase in large energy companies navigating the Red Sea has yet to be seen. That “would give confidence” to others, he added. “We need to watch and see what the wider industry does. We have to see how the insurance market possesses that risk,” said Simon James, vice president of crude trading and refinery optimization at Norway’s Equinor
President Donald Trump’s renewed trade war on China and threats of tariffs on other countries. Brent crude futures were up 42 cents, or 0.6%, at $74.71 a barrel, but were poised to fall 2.6% this week. U.S. West Texas Intermediate crude was up 39 cents, or also 0.6%, to $71 a barrel, down 2% on a weekly basis. The U.S. Treasury said on Thursday it was imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China, in an incremental move to increase pressure on Tehran.
“Trump has talked about maximum pressure (on Iran). The market takes that quite seriously,” said Michael Haigh, global head of commodities research at Societe Generale. The French bank projects that Iranian oil exports are set to halve. “The imposition of tariffs and the pauses should be bullish for the oil market because it adds uncertainty. But you haven’t seen this response because of demand concerns. Tariffs and tit for tat responses from nations, it hurts global GDP … and oil demand,” Haigh added. Trump has announced a 10% tariff on Chinese imports as part of a broad plan to improve the U.S. trade balance, but suspended plans to impose steep tariffs on Mexico and Canada. “Downside pressure has stemmed from the news flow around tariffs, with concerns over a potential trade war fuelling fears of weakening oil demand,” analysts at BMI said in a note on Friday. Oil prices settled lower on Thursday after Trump repeated a pledge to raise U.S. oil production, unnerving traders a day after the country reported a much bigger than anticipated jump in crude inventories.