Oil prices fell about 1% on Friday as traders weighed advancing U.S.-Iran diplomatic talks against ongoing supply risks in the Persian Gulf.
Brent futures dropped $1.14, or 1.1%, to $105.46 a barrel by 10:03 a.m. EDT (1403 GMT), while West Texas Intermediate crude slipped $1.05 to $93.56. Brent has gained roughly 2% for the week, while WTI is down about 7%, pushing the Brent-to-WTI spread premium to its highest level since May for a third consecutive session.
"Diplomatic hopes are essentially helping oil prices weather the latest military strikes in the Middle East, with crude trading moderately softer despite the attacks," said Tim Waterer, chief analyst at KCM Trade.
Negotiators in New York are exploring a phased path out of the war between the United States and Iran, which began on Feb. 28 after U.S. and Israeli strikes on Iranian targets. The framework involves Tehran reopening the Strait of Hormuz in exchange for Washington lifting its economic blockade.
Ship-tracking data for the week starting Sept. 20 showed 33.7 million barrels transiting the Strait, carried on 19 tankers — 17 of them very large crude carriers capable of moving roughly 2 million barrels each. Most were laden with Saudi crude, followed by Iraqi shipments. Before the onset of the Iran conflict, approximately 20% of global oil supplies moved through the strait.
Meanwhile, President Donald Trump told Chinese President Xi Jinping during talks that Chinese support for Iran was unacceptable, according to the U.S. ambassador to China, David Perdue. Separately, Saudi Arabia, Turkey, and Pakistan are scheduled to hold military discussions on assistance for Riyadh against Houthi attacks backed by Iran.
In a related development, U.S. authorities have discussed a possible ban on diesel exports, which has widened the gap between American crude benchmarks and Brent as markets anticipate refiners will process less crude if diesel output stays domestic.
On the Russia front, heavy drone strikes targeted refineries following UN headquarters discussions on a potential energy-related ceasefire. Yuri Slyusar, governor of the Rostov region, reported that a drone attack damaged the Novoshakhtinsk oil refinery, forcing a temporary suspension of operations. Ukrainian President Volodymyr Zelenskiy said the U.S. proposed that the United Arab Emirates host a trilateral meeting between Washington, Kyiv, and Moscow.
Russia, an OPEC+ member, was the world's third-biggest crude producer in 2025 behind the United States and Saudi Arabia, according to U.S. energy data, as the 4-1/2-year war with Ukraine continues to shape global supply dynamics.
