Oil Prices Slide on Hopes for Truce Between US and Iran
Oil prices dropped by about 2% on Friday due to mounting hopes for a truce between the US and Iran. The Strait of Hormuz, a key shipping lane through which one-fifth of the world's oil passes, could soon reopen as part of a phased path out of war.
The talks between US and Iranian negotiators in New York come after a senior Iranian official told Reuters that Tehran will show no flexibility over its nuclear program. However, the official said Iran is willing to reopen the Strait of Hormuz if the US lifts its economic blockade and reopens its ports.
The complex is under pressure as markets continue to assess the possibility of a diesel export ban in the US, which could widen the gap between US crude oil futures and the global Brent benchmark. Analysts at energy advisory firm Ritterbusch and Associates noted that this ban would lead to less crude oil being processed by US refiners.
The US has been discussing help for Saudi Arabia as it faces attacks from Yemen's Houthi rebels, which have disrupted oil flows from the world's largest energy exporter. The Houthis have launched strikes on the Saudi-backed government in Yemen and repeatedly fired into Saudi Arabia.