Oil posted slight gains on Friday as markets approached a long U.S. holiday weekend, with traders cautiously optimistic that diplomatic efforts between the United States and Iran will hold.
Price moves - As of 0155 GMT, Brent futures were trading 17 cents higher, or 0.24%, at $72.10 a barrel, while West Texas Intermediate (WTI) rose 14 cents, or 0.20%, to $68.83 a barrel. U.S. markets will be closed on Friday ahead of the U.S. Independence Day holiday on Saturday.
Those modest upticks came after the two crude benchmarks reached their lowest levels in the prior session since before the U.S.-Israeli war on Iran began in late February. For the week, Brent was down 0.02% and WTI was up 0.12% - the smallest weekly moves for both benchmarks in months.
Market participants described the tone as cautious. "It’s a case of guarded optimism, with the market wanting to believe the peace efforts will hold, but it’s still hedging its bets until it sees real evidence on the water," said Tim Waterer, chief market analyst at KCM Trade.
Supply signals from the Gulf - There are early signs that oil flows and production in the Gulf are beginning to pick up. Some countries are working to increase output in step with the reopening of the Strait of Hormuz - a waterway that, prior to the beginning of the war, carried one-fifth of the world’s daily supply of oil and liquefied natural gas.
Kuwait increased its oil production sharply, rising to 1.65 million barrels per day in June from 580,000 bpd in May, a source familiar with the matter said on Thursday. The OPEC member expanded exports following the U.S.-Iran interim peace agreement.
Additional shipping movements were also reported: at least five supertankers carrying a total of 10 million barrels of Saudi oil have exited the Strait of Hormuz, with Saudi Aramco switching to spot pricing to speed sales in Asia, according to trade sources and shipping data.
Market context - The combination of thin holiday liquidity and markets waiting for concrete confirmation of sustained calm in the region left traders taking a measured approach. Price changes were modest and weekly volatility was unusually low compared with previous months.
Bottom line: Crude prices moved up slightly on cautious hopes that diplomatic progress in the Middle East could restore flows through critical shipping lanes and allow Gulf producers to lift exports, but markets remain attentive to tangible signs that such improvements are durable.