Oil Prices Sink as US-Iran Diplomacy Takes Center Stage

Oil prices took another hit on Friday as diplomatic efforts between Iran and the US returned to focus. West Texas Intermediate crude fell 2.3% to $92.41 a barrel, with its weekly loss now at 7.9%. Brent crude also dropped 2.1% to $104.32, but managed to finish the week roughly flat.

Iran has put forward a new proposal, suggesting it could reopen the Strait of Hormuz within seven days if Washington meets the terms of an interim peace agreement reached in June. The waterway is a crucial route for global energy shipments and has been at the center of the conflict.

The US is now considering Tehran's latest offer, with Iranian Foreign Minister Abbas Araghchi stating that his country would resume negotiations toward a permanent agreement once Washington meets the conditions contained in the earlier memorandum of understanding. Araghchi also noted that the timing of any deal depends on the US political calendar, but suggested it would be better to reach an agreement before the midterm election.

Meanwhile, Iranian oil exports remain heavily restricted, with no major crude cargo moving through Hormuz toward China for about seven weeks. However, millions of Iranian barrels are being transported in the opposite direction, with almost 6 million barrels worth around $600 million recently crossing the Atlantic on their way to the US.