Oil prices fell roughly 1% on Friday as markets weighed prospects of a U.S.-Iran truce against mounting concerns that Houthi attacks on Saudi Arabia could disrupt Middle Eastern supply routes.
Brent crude futures dropped $1.14, or 1.1%, to $105.46 a barrel by 10:03 a.m. EDT, while West Texas Intermediate fell $1.05, also 1.1%, to $93.56. The moves followed a sharp rebound on Thursday when both contracts surged as much as 5%, with Brent settling 3.4% higher and WTI gaining 2.7%. For the week, Brent rose about 2% while WTI declined roughly 7%.
U.S. and Iranian negotiators in New York are exploring a phased path out of the conflict that would see Tehran reopen the Strait of Hormuz and Washington lift its economic blockade, sources close to the talks said. About a fifth of the world’s oil and gas shipments passed through the strait before the war began with U.S. and Israeli strikes on Iran on Feb. 28, according to the source material.
Crude exports through the Strait of Hormuz reached 33.7 million barrels in the week starting Sept. 20, preliminary ship-tracking data from Kpler showed, roughly matching the prior week’s levels. The traffic included 19 tankers, 17 of them very large crude carriers capable of carrying 2 million barrels each, most laden with Saudi crude followed by Iraqi supplies.
Meanwhile, fresh military activity around Saudi Arabia kept supply concerns alive. Riyadh said it intercepted six ballistic missiles fired by Yemen’s Iran-backed Houthis aimed at the southern province of Taif and the Yanbu area on the Red Sea. Saudi Arabia has been increasing crude flows through its East-West Pipeline to Yanbu but tanker loadings have not yet resumed, according to industry sources and satellite imagery.
“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.
In a separate development, talk of a possible U.S. ban on diesel exports widened the gap between domestic crude and the global Brent benchmark. The premium of Brent over WTI rose to its highest level since May for a third consecutive day.
U.S. President Donald Trump also signaled to Chinese President Xi Jinping that Beijing’s support for Iran is unacceptable, according to U.S. Ambassador to China David Perdue. Any agreement reducing U.S.-China trade tensions could boost economic growth and energy demand.
On the Russia-Ukraine front, Ukrainian President Volodymyr Zelenskiy said the U.S. proposed the United Arab Emirates host a trilateral meeting with Kyiv and Moscow to discuss ending the war. A drone strike damaged the Novoshakhtinsk oil refinery in Russia, forcing a temporary suspension of operations, regional Governor Yuri Slyusar said. Heavy drone attacks on Russian refineries followed UN-mediated discussions on a potential energy-related ceasefire.
Russian President Masoud Pezeshkian told Fox News that the decision to end the war rests with Washington. The conflict, now approaching its seven-month mark, has disrupted global oil trade and raised energy-supply fears.
