Oil Prices Fall Amid Iran Truce Hopes, but Risk Premium Persists

Oil prices fell on Friday as markets weighed the possibility of a truce between the US and Iran against concerns that increasing attacks against Saudi Arabia by Houthi rebels could disrupt supply from the key Middle Eastern producer.

The spread between Brent and WTI, which is the widest it has been since May at $12.50 a barrel, reflects a growing divergence between global supply risks and U.S. market fundamentals, according to Sugandha Sachdeva, founder of SS WealthStreet.

Brent is carrying a substantial geopolitical risk premium as Gulf supplies remain constrained, while higher US production and inventories are keeping the WTI at a substantial discount to Brent, Sachdeva said.