Oil prices edged up on Friday but were headed for a second weekly decline as the continued US focus on its blockade and economic pressure on Iran eased fears of renewed fighting in the Middle East, though shipping attacks remained a supply risk.
Brent futures LCOc1 were up 53 cents, or 0.55%, to $96.35 a barrel at 0900 GMT. US West Texas Intermediate (WTI) futures CLc1 added 20 cents, or 0.23%, to $88.94 a barrel.
For the week, Brent and WTI were both on track for a 2% drop. The benchmarks plunged 16% and 13%, respectively, last week.
"The market is range bound post midterms. The ability for more hostilities (in Iran) is restricted but a deal is equally elusive," said Jeff Currie, founder of Real Macro and former global head of commodities research at Goldman Sachs.
"That means the market is roughly balanced, with the ability to trade up limited and the ability to trade down limited," he said.
Oil has had a volatile trading week, with earlier hopes for a rapprochement in the US-Israeli war on Iran, now in its ninth month, offset by strikes on Saudi Arabian infrastructure by Yemen’s Iran-backed Houthis and attacks on tankers shipping crude out of the Gulf.
US President Donald Trump said on Truth Social a deal with Iran was not necessary to end the war.
"Trump's indications that further military escalation against Iran may not be necessary have raised expectations that Washington could increasingly rely on economic sanctions and restrictions on oil shipments rather than intensifying military operations," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
The weakness in oil prices is also largely driven by signs of softening US demand, as rising crude oil and fuel inventories indicate a relatively subdued consumption outlook, Sachdeva said.
US crude and fuel inventories rose last week, driven by softer refined products demand and a jump in oil imports, the Energy Information Administration said on Thursday.
Despite the easing prices, risks remain for oil shipments out of the Strait of Hormuz, the key waterway for crude exports from the main Middle East producers.
On Thursday, Iran's military said four oil tankers were hit by explosions in the Strait of Hormuz after ignoring warnings. Reuters could not immediately verify the Iranian accounts.
That same day, Yemen's Iran-aligned Houthis said they had attacked a pumping station on the Saudi East-West oil pipeline, an oil facility in the Saudi Red Sea city of Yanbu, and an Aramco building in the capital Riyadh.
"Geopolitical risks remain elevated, and any fresh disruption to oil supplies could quickly reignite upward pressure on prices," Sachdeva of SS WealthStreet said.
(Reuters - Reporting by Anna Hirtenstein in London. Additional reporting by Helen Clark and Sethuraman N R; Editing by Christian Schmollinger, Sonali Paul, Thomas Derpinghaus and Tomasz Janowski)