HOUSTON (Reuters) – Oil prices dipped a few cents per barrel on the last working day of the business week on Friday, consolidating recent gains and holding near six-month highs, supported by nagging tensions between the US and Iran.
Brent crude futures settled at $70.69 a barrel, down 2 cents or 0.03%. The March contract expires later on Friday. US West Texas Intermediate crude finished at $65.21 a barrel, down 21 cents or 0.32%.
"It's really all about Iran right now," said John Kilduff, partner with Again Capital. "The market had priced in a lot of geopolitical risk on Iran, but it's difficult to quantify the market at this point. The question is if there is action against Iran, what will the Iranians do?"
On Thursday, oil prices hit their highest since early August. Multiple sources said US President Donald Trump was weighing actions against Iran that included targeted strikes, raising concerns about supply disruptions.
Both the US and Iran have since signalled willingness to engage in dialogue, but Tehran on Friday said its defence capabilities should not be included in any talks.
"These gains have paused amid prospects of a chilly ceasefire between Russia and Ukraine and the possibility that an attack on Iran might not occur, as the Trump administration opens the door for talks on Iran’s nuclear program," said Phil Flynn, senior analyst with Price Futures Group.
The US, which has strengthened its military position in the Middle East in recent weeks, issued new sanctions targeting seven Iranian nationals and at least one entity.
A rise in the dollar from four-year lows hit earlier in the week put some pressure on oil prices. Friday's dollar strength followed Trump's announcement that he would pick former Federal Reserve Governor Kevin Warsh to head the US central bank when Jerome Powell's term ends in May.
A stronger dollar can limit demand from oil buyers paying in other currencies.
"Rising US crude oil output after shutdowns and Kazakhstan nearing the resumption of production at the Tengiz oilfield also contribute to the change in sentiment, and given the week’s bullish performance, it is reasonable to expect some profit-taking ahead of the weekend," said PVM Oil Associate analyst Tamas Varga.