Oil Prices Slide on Diplomatic Hopes vs. Saudi Supply Risks

Oil prices declined by about 1% on Friday as markets weighed the possibility of a truce between the US and Iran against concerns that increasing attacks against Saudi Arabia could disrupt supply from the Middle Eastern producer.

The price drop was driven in part by talks between US and Iranian negotiators in New York, who are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade on Iran, according to sources close to the talks.

Despite this diplomatic effort, concerns over Saudi supply risks remain high. Houthi fighters have launched strikes against the Saudi-backed government in Yemen and repeatedly fired into Saudi Arabia, disrupting oil flows from the world's largest energy exporter.

The Houthi attacks come as US President Donald Trump made clear during talks with Chinese President Xi Jinping that Chinese help for Iran is unacceptable.