Oil prices steadied in early trade on Friday and were headed for their first weekly gain in three as uncertainty over the U.S.-Iran conflict and West Asian supplies kept a risk premium in play.

But crude trimmed some weekly gains after key industry bodies cut their outlook for demand this year, while a surprise, outsized build in U.S. inventories also spooked markets.

Brent Oil Futures rose 0.18% to $87.23 a barrel, while West Texas Intermediate crude futures rose 0.16% to $81.39 a barrel by 20:02 ET (00:02 GMT).

Oil heads for weekly gains as U.S., Iran remain at odds over Hormuz
Brent and WTI futures were trading up around 4% this week, as signs of continued disruptions in West Asian supplies saw traders retain a risk premium for crude.

The U.S. and Iran continued to make conflicting claims over controlling the Strait of Hormuz and the status of shipping through the key waterway.

Iran said it had full control of the waterway and that it was shut to commercial shipping, while the U.S. said it continued to facilitate shipping through the waterway.

Separate shipping data showed vessels continuing to avoid Hormuz amid continued concerns over more U.S.-Iran military action.

Hormuz’s closure was a key point of support for oil prices this year, given that roughly 20% of the world’s oil consumption passed through the waterway.

Adding to concerns over regional supply disruptions, Yemen’s Iran-backed Houthi group began attacking commercial vessels in the Red Sea and the Bab al-Mandab Strait, another key shipping lane for crude.

But despite the supply uncertainty, crude’s weekly gains were dulled by both the Organization of Petroleum Exporting Countries, and the International Energy Agency cutting their demand forecasts for the year.

A weekly spike in U.S. oil inventories also spooked markets, although other data showed the U.S.’ emergency stockpile was at its lowest level in over 40 years.

Source: Investing.com

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