Oil Prices Dip as Market Weighs Potential Venezuela Supply Against Mideast Tensions

Oil prices edged lower in Friday trading as the market processed reports of a potential U.S. deal to access Venezuelan crude against persistent geopolitical tensions surrounding the Strait of Hormuz. Both major benchmarks are on track for significant weekly losses despite a brief rally on Thursday.

As of 8:41 PM ET (00:41 GMT), Brent crude futures, the international benchmark, were down 0.3% at $89.45 per barrel. West Texas Intermediate (WTI) crude futures, the U.S. benchmark, fell 0.2% to $83.39 per barrel. Despite a strong rebound on Thursday, both contracts are projected to end the week with losses between 4% and 5.5%.

U.S. Nears Deal for Venezuelan Oil Access

Downward pressure on prices followed a Reuters report on Thursday that the Trump administration is close to finalizing a long-term agreement to access a portion of Venezuela's substantial crude reserves. The deal would reportedly grant the U.S. government control over a selection of Venezuelan oil fields, to be developed by American companies.

Markets have been alert to the possibility of increased supply from Venezuela under U.S. control. However, analysts caution that a significant boost to actual production would require considerable time and investment to develop the country's oil infrastructure. Adding to the shifting supply landscape, separate reports indicated Venezuela is considering leaving the Organization of the Petroleum Exporting Countries (OPEC) amid its deepening ties with Washington.

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Strait of Hormuz Tensions Create Volatility

Crude prices have been pressured for most of the week, influenced by an earlier agreement between Iran and Oman to allow some ships to pass through the Strait of Hormuz. The prospect of reopening the waterway, which supplied roughly one-fifth of the world's oil before the U.S.-Iran conflict, has weighed on futures.

However, oil pared some of its weekly losses after a Wall Street Journal report on Thursday stated that President Trump is not interested in returning to a June peace agreement with Iran. Tehran has repeatedly called for the U.S. to honor the terms of that deal, which expired in early August, before any further negotiations take place.