Oil prices fell marginally in early Friday trading but remained on track for weekly gains as the US and Iran strikes pushed the fragile ceasefire to the brink and raised fears of a return to full-scale war.
West Texas Intermediate, the US crude benchmark, lost 4 cents, or 0.06 per cents, to $72.04 on Friday morning. Brent futures, the international benchmark, dropped 6 cents, or 0.08 per cent, to $76.24 a barrel early on Friday.
Despite Friday's slight decline, Brent was on track to post a weekly gain of around 6 per cent while WTI was set to rise about 5 per cent for the week after both contracts dropped more than 20 per cent in June when the ceasefire was agreed.
It comes as the US and Iran continued to trade strikes in exchanges that began on Tuesday, and the Strait of Hormuz saw a "dramatic" drop in the number of ships passing through it.
The US said it hit 90 Iranian military targets, including air defence systems, coastal surveillance assets, and missile and drone storage sites.
Donald Trump gave mixed messaging – approving back-to-back military strikes and claiming the ceasefire is over while insisting they don't mean a return to full-scale war – fuelling uncertainty about what comes next.
The US attacks had killed 14 people and injured 78 across five provinces in two days till Thursday, Iranian state media reported. The Fars news agency said one US strike had hit a rail bridge used for trade with Russia and China.
Iran said it responded by targeting US assets in Kuwait, Bahrain and Qatar. Tehran launched more strikes in Kuwait, Jordan, and Iraq later on Thursday.
The renewed fighting came the day that Iran buried its slain Supreme Leader Ayatollah Ali Khamenei, marking the culmination of a week of mass funeral processions and rallies. Khamenei was killed on the first day of the war on February 28.
During the funeral procession, many held placards that read “Kill Trump” and chanted slogans demanding revenge on President Trump for the ayatollah’s killing.
“I swear by the blood of the supreme leader, Trump, we will kill you!” they shouted.
"Despite the US ramping up attacks on military sites in Iran, the market drew some reassurance from the Trump administration’s decision to avoid targeting Iranian energy infrastructure," said Daniel Hynes, the senior commodity strategist for ANZ bank.
"This was aided by comments from President Trump, who said he doesn’t expect a return to a full-scale conflict."
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