Oil declines as Iran downplays an alleged Israeli strike

Oil declines as Iran downplays an alleged Israeli strike

By 11:55 GMT, Brent futures had dropped 48 cents, or 0.6%, to $86.63 per barrel. The most traded West Texas Intermediate contract in the United States was down 0.5%, or 38 cents, to $82.35.

With the price decline that began on Monday reaching above 4%, this will be the worst weekly loss since early February.

Oil prices fell on Friday after previously rising by more than $3, indicating that Iran may be able to avert a possible escalation of hostilities in the Middle East by downplaying reports of Israeli assaults on its territory.

By 11:55 GMT, Brent futures had dropped 48 cents, or 0.6%, to $86.63 per barrel. The most traded West Texas Intermediate contract in the United States was down 0.5%, or 38 cents, to $82.35.

Isfahan, in Iran, heard explosions on Friday that some said were the result of an Israeli strike. However, Tehran downplayed the event and said it had no intentions to retaliate, allaying fears that the conflict may spread across the area.

In response for an alleged Israeli airstrike on April 1 that damaged a building in Iran's embassy complex in Damascus and killed several senior Iranian commanders, Iran launched a volley of drone strikes and ballistic missiles at Israel on Saturday.

According to Joshua Mahony, chief market analyst at Scope Markets, "we have seen both equities and crude reverse some of those preliminary moves, even though the initial spike in oil may have highlighted the initial fear of further escalation."

The events of the last week seem to be less about trying to start a conflict and more about demonstrating their readiness to act.This is the best-case scenario for markets.

Investors have been progressively unwinding the risk premium associated with oil this week, having been keenly watching Israel's response to the Iranian drone assaults on April 13.

With the price decline that began on Monday reaching above 4%, this will be the worst weekly loss since early February.

"The excessive amount of oil supply at risk continues to worry the oil market," said Bjarne Schieldrop, a commodities analyst at SEB Research.

Congressmen in the United States, meantime, have hidden penalties on Iran's oil shipments inside an assistance package that is still being considered for Ukraine. The sanctions target Chinese financial institutions' purchases of Iranian petroleum as well as ships, ports, or refineries that handle Iranian crude.

Based on statistics from Reuters, Iran is the third-largest oil production within the Organization of the Petroleum Exporting Countries (OPEC).

The United States also imposed sanctions on Iran this week, specifically aimed at its manufacturing of unmanned aerial vehicles.