Analysts insist that both countries are committed to a peace deal, despite hiccups: File Image/Pixabay

A drone attack by Iran on a cargo ship near Oman in the Strait of Hormuz did little to alter oil’s downward trajectory on Friday: by mid-session Brent was trading 4 percent lower at $72.02 per barrel, and West Texas Intermediate dropped 3.6 percent to $69.34 per barrel.

This contributed to oil being poised for a record sixth consecutive weekly decline.

While the steady price declines reflect a remarkably resilient analytical sentiment that peace negotiations between Washington and Tehran over the next few months will be successful, Iran in a matter of days has violated the ceasefire agreement between the two countries, and tensions in the Middle East are ramping up.

Iran’s foreign ministry responded to criticism over its cargo ship attack by reiterating that “safe passage through the Strait of Hormuz is not guaranteed” for ships that do not first seek authorization from Tehran to navigate the waterway."

Exacerbating the situation is the U.S., and Iran disagreeing over the use of funds covered by the 60-day Memorandum of Understanding, as well as concern that Oman will collaborate with Iran to collect fees for safe passage through the Hormuz.

Also, Oman authorities on Friday told European officials that “there’s no way of going back to the pre-war status quo” in the strait and that ships may have to be charged fees for de-polluting the waterway or for navigating it. 

Scott Nations, president of Nations Indexes, told media on Friday that “there is so much still that is to be questioned about the actual [peace] agreement; I think we’re being too optimistic, because nothing really has been resolved, and Iran knows that they have the world economy where they want it if they want to shut down the strait.”

Still, Allen Good, director of equity research at Morningstar, maintained that “The market continues to look through these flare-ups as it perceives [U.S. president Donald] Trump and the Iranians as ultimately committed to a near-term deal and the opening of the strait.”

Meanwhile, trading was also influenced by Iraq, which reportedly informed the Organization of Petroleum Exporting Countries (OPEC) that unless it was granted a higher production quota, it would leave the cartel.

Data shown to media by QuantCube Technology revealed that Iraq’s overall exports have dried up since the U.S./Iran war began, due to its geographical dependence on the Hormuz.