Oil slides nearly 2% as markets look past fresh Iran tensions and focus on supply outlook

• Iran was identified by U.S. officials as behind an attack on a Singapore-flagged cargo ship near Oman in the Strait of Hormuz, though no casualties or environmental damage were reported
• The International Maritime Organization temporarily paused its vessel evacuation program to reconfirm safety guarantees amid heightened regional tensions
• OPEC faces potential disruption as Iraq reportedly seeks a higher production quota and may exit the cartel, following the UAE's departure in May as the group's second-largest producer

Summary

Market Movement:

Oil prices declined nearly 2% on Friday, with Brent crude futures falling 1.89% to $73.84 per barrel and U.S. crude dropping 1.92% to $70.54 per barrel. Markets looked past Middle East tensions to focus on supply dynamics.

Key Developments:

*Geopolitical Tensions:* A U.S. official confirmed Iran was behind an attack on a Singapore-flagged cargo ship near Oman's coast in the Strait of Hormuz. The vessel reported no casualties or environmental damage. The International Maritime Organization temporarily paused its evacuation program to reassess safety guarantees for regional shipping.

*U.S.-Iran Dispute:* Disagreements emerged over a memorandum of understanding between Iran and the U.S. regarding fund usage. Iran's parliament rejected claims that released assets would purchase American agricultural products, while U.S. officials maintained funds would require American approval.

*OPEC Concerns:* The cartel faces potential disruption as Iraq, OPEC's second-largest producer, reportedly threatened to exit if demands for higher production quotas aren't met. This follows the UAE's departure in May.

Market Implications:

Despite geopolitical risks in a critical oil transit route, investors remained focused on supply outlook rather than tension premiums. Analyst Scott Nations warned markets may be "too optimistic," noting Iran could leverage control over the Strait of Hormuz to impact global oil supply. The potential fragmentation of OPEC, combined with producer disputes, adds uncertainty to future supply coordination and pricing power.