Oil Prices Slide Amid Hopes for US-Iran Truce and Diesel Export Ban
Oil prices fell around 2% on Friday as hopes for a truce between the US and Iran rose, along with talk of a possible US ban on diesel exports. The Brent futures price dropped $2.28 to settle at $104.32 a barrel, while West Texas Intermediate (WTI) crude fell $2.20 to settle at $92.41.
US and Iranian negotiators are exploring a phased path out of war, which would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade on Iran. However, Iran said it will not compromise on its nuclear program even if the US accepts its proposal to reopen the Strait.
The possible ban on diesel exports is widening the gap between US crude oil futures and the global Brent benchmark, a sign that markets expect US refiners to process less crude oil if their diesel output gets stuck at home. The premium of Brent crude over WTI rose to its highest since May for a third day in a row.