First Weekly Loss For Oil Since December As Iran Deal Seems Closer To Fruition

Meanwhile, Asian refiners scramble for more crude supplies: File Image/Pixabay

Despite white-hot demand across the globe for the commodity, oil on Friday posted its first weekly loss since December, thanks to several sessions of steep losses due mainly to the potential for Iran to re-enter the world market and alleviate supply shortages.

Friday's mixed trading was also the result of escalating tensions between Ukraine and Russia, the latter of which analysts believe is on the brink of launching an invasion.

West Texas Intermediate fell 69 cents to settle at $91.07 per barrel, while Brent rose 57 cents to settle at $93.54 per barrel, causing Ed Moya, senior market analyst for the Americas for Oanda, to point out that "energy traders are taking risk off the table."

Other forms of risk mitigation were undertaken on Friday with regards to geopolitical tension, with Mario Draghi, prime minister of Italy, urging that any sanctions that may be imposed on Russia by the European Union should not include energy imports.

South Korea's trade minister, Yeo Han-Koo, told media his country is assessing the conflict's impact on energy prices as well as possible supply disruptions, given that as much as 92 percent of South Korea's needs are being met by energy imports.

Meanwhile, while high crude prices worry economists who think it may ultimately impact demand, oil at near $100 per barrel is doing nothing to slow down demand from refiners in Asia, where a significantly reduced stream of fuel exports from China in recent months has left this part of the world shorter on supply and more sensitive to disruptions.

Bloomberg reported that state-run processors in India have been seeking to buy more crude for March and April, while in South Korea SK Innovation Co. plans to raise utilization rates at its Ulsan refinery to an average of 85 percent in the first three months of the year, up from 68 percent in the previous quarter.

Also, CPC Corp. in Taiwan is set to further raise processing rates, which are currently above 90 percent at Dalin and more than 80 percent at Taoyuan.

Finally, although analysts are pinning a lot of hopes on Iran soon adding oil barrels to an exceedingly tight market, it was reported on Friday that the deal being discussed with the Islamic republic lays out phases of steps to bring both sides back into full compliance, with waivers on oil sanctions coming late into the process; this means little chance of Iranian crude returning to the market in the immediate future.