Oil prices saw volatile trading this week as escalating Middle East tensions and dimming demand forecasts have brought more uncertainties to the market.
Oil prices logged lowest finish since January on Wednesday, trading more than 20 percent lower from their April peak.
On Thursday, both West Texas Intermediate (WTI) for July delivery and Brent crude for August delivery rebound 2.23 percent. Analysts said concerns over output disruptions supported crude prices Thursday.
Two oil tankers were hit in the Sea of Oman on Thursday morning, with at least one of them operated by a Japanese company. The attacks came amid Japanese Prime Minister Shinzo Abe's visit to Tehran, who is seeking to help ease tensions between Iran and the United States.
US Secretary of State Mike Pompeo told reporters during a brief press conference at the State Department on Thursday afternoon that Iran is responsible for the attacks without providing hard evidence.
Iran's Foreign Minister Mohammad Javad Zarif said earlier in the day that the attacks on two oil tankers were "suspicious," noting that they occurred while Abe was meeting with Iran's Supreme Leader Ayatollah Ali Khamenei "for extensive and friendly talks."
"While I very much appreciate P.M. Abe going to Iran to meet with Ayatollah Ali Khamenei, I personally feel that it is too soon to even think about making a deal. They are not ready, and neither are we!" Trump tweeted on Thursday afternoon.
The incident happened against the backdrop of escalating tensions in the Middle East as well as between the United States and Iran. Washington withdrew from the Iran nuclear deal in mid-2018 and re-imposed full sanctions on Iran's oil exports.
In May, four commercial vessels suffered similar sabotage off the coast of the United Arab Emirates.
Oil prices dipped to five-month lows earlier in the day after the Organization of the Petroleum Exporting Countries (OPEC) revised down its forecast for global oil demand growth.
Analysts said worries over oil demand growth have lingered for a while as prolonged trade tensions between the United States and its major trading partners have weighed on global economic outlook.
OPEC now expects world oil demand to grow by 1.14 million barrels per day (bpd) in 2019, 0.07 million bpd lower than its last forecast. Total global oil consumption is expected to average 99.86 million bpd, it said in its monthly oil market report.
The group said in the report that throughout the first half of this year, ongoing global trade tensions have escalated, threatening to spill over, and geo-political risks remained in many key regions.
"This has resulted in a slowdown in global economic activities, and weaker growth in global oil demand, both compared to a year earlier," the group said.
In the meantime, OPEC production fell by 236,000 bpd last month to 29.88 million bpd, according to secondary sources cited by the group. It was the first time OPEC produced below 30 million bpd since June 2014.
The oil exporters' group expects Non-OPEC oil supply in 2019 to grow at a pace of 2.14 million bpd, suggesting supply might exceed the demand.
Non-OPEC supply growth is anticipated to show further upside potential, with higher production expected in the United States, as well as production ramp-ups in Brazil and possibly the start-up of Norway's Johan Sverdrup field in the North Sea, said the report.
The report came as the group is considering extending a six-month output cut deal with some non-member exporters including Russia.
Caroline Bain, chief commodities economist at Capital Economics, said in a note that "OPEC highlighted risks to demand and high stocks in its latest report which, coupled with lower prices, suggest that there will be little appetite for increasing production when the group meets later this month."
"OPEC appeared to be preparing the ground for retaining, or even cutting, its production quotas," Bain said.
