Oil Prices Ease Amid Iran Truce Hopes and Middle East Supply Concerns

Oil prices eased slightly on Friday after surging to more than $108 per barrel in the previous session. Investors weighed the possibility of a truce between the US and Iran against the bombings of Saudi Arabia by Houthi rebels, which renewed fears of supply disruptions from Opec's biggest producer.

Brent, the benchmark for two-thirds of the world's oil, was down 1.2 per cent to $105.3 a barrel at 10am UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 2 per cent lower at $92.72 a barrel.

“Brent crude rose sharply on Thursday after Saudi Arabia said it had intercepted missiles launched by Houthi militia, and an Iranian military adviser threatened to widen the conflict to the Indian Ocean,” Jeanne Walters, senior economist at Emirates NBD, said in a research note.

“Prices reached an intraday high of just over $108 per barrel before reports that US and Iranian negotiators were exploring a phased deal to reopen the Strait of Hormuz moderated the rally.”

Brent closed at $106.6 per barrel on Thursday and fell further on Friday following reports of Iran peace talks progressing to end the conflict. Brent is on track to post a weekly gain of about 2 per cent, while WTI is down about 7 per cent for the week. Meanwhile, ship traffic across the Strait of Hormuz and Bab Al Mandeb remains sparse amid Middle East tensions.

In precious metals, gold prices eased on Friday and were set to post a weekly loss on the back of a stronger dollar and growing expectations that the Federal Reserve will keep interest rates elevated to contain inflation. Spot gold fell 0.09 per cent to $4,271.01 per ounce at 9.56am UAE time, influenced by shifting geopolitical components and US-China trade discussions noted by Naeem Aslam, chief investment officer at Zaye Capital Markets.