Oil Prices Slide as US-Iran Truce Hopes Clash with Saudi Supply Fears

Oil prices have declined by over 2% as markets weigh hopes of a US-Iran truce against concerns over oil supplies from Saudi Arabia. The Strait of Hormuz remains a key focus for oil markets, with crude flows out of the waterway reaching 33.7 million barrels in the week starting September 20.

Talks between US and Iranian negotiators in New York have explored a phased route out of the war, which would involve Tehran reopening the Strait of Hormuz in return for Washington lifting its economic blockade of Iran.

Iran has indicated that the talks would not mean a change in its position on its nuclear program. 'Iran will show no flexibility over its nuclear program even if the US accepts its proposal to reopen the Strait of Hormuz,' a senior Iranian official said.

The prospect of a possible ban on diesel exports is also influencing crude prices, widening the spread between US crude futures and the global Brent benchmark.