Oil Prices Slide Amid US-Iran Diplomacy and Disrupted Oil Supplies
Oil prices slid about 2% on Friday as diplomatic efforts between the US and Iran gained momentum, potentially paving the way for a truce in the Strait of Hormuz. The drop in oil prices came as the US considered imposing a ban on diesel exports, which would impact crude oil futures. Meanwhile, attacks by Houthi fighters have disrupted oil supply from Saudi Arabia, further weighing on global energy markets.
US and Iranian negotiators are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran. However, an Iranian official stated that the country will not compromise on its nuclear program, even if the US accepts its proposal to reopen the strait.
The premium of Brent crude over WTI rose to its highest since May for a third consecutive day, while US gasoline futures fell around 4% on Friday. The escalating conflict in the Middle East has disrupted oil flows from Saudi Arabia, with preliminary ship-tracking data showing that crude oil exports through the Strait of Hormuz reached 33.7 million barrels in the week starting September 20.