Oil Prices Plummet as US-Iran Truce Hopes Clash with Middle East Tensions

Crude oil prices slipped by over one percent on Friday as hopes of a possible US-Iran truce clashed with fresh security risks in the Middle East. The Houthi missile attack on Saudi Arabia revived fears of supply disruptions, pushing down Brent crude to $105 a barrel and West Texas Intermediate (WTI) to $93 a barrel.

The US and Iranian negotiators are discussing a phased route out of the war that would see Tehran reopen the Strait of Hormuz and Washington lift its economic blockade of Iran. This potential development has raised hopes for increased oil supply, but security risks remain high after Saudi Arabia intercepted six ballistic missiles launched by Yemen's Houthi rebels.

Goldman Sachs has outlined a scenario in which oil prices could reach as much as $120 a barrel if attacks on vessels in the Middle East intensify. JPMorgan analysts have also lost visibility on the direction of oil prices, citing escalating tensions and an already worsening supply shock.