Oil Prices Slide on Hopes for US-Iran Truce and Diesel Export Ban

Oil prices took a hit on Friday, falling about 2% as hopes for a truce between the US and Iran mounted. The drop was largely driven by expectations that the US might impose a ban on diesel exports, which would widen the gap between domestic crude oil futures and the global Brent benchmark.

The price of Brent futures settled at $104.32 a barrel, while West Texas Intermediate (WTI) crude fell to $92.41 per barrel. The decline marked the second straight day of losses for WTI, which is down about 8% this week.

US and Iranian negotiators are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz in exchange for Washington lifting its economic blockade on Iran. However, Iranian officials have emphasized that they will not compromise on their nuclear program, even if the US accepts their proposal to reopen the strait.

The complex is under pressure as markets assess the possibility of a diesel export ban and diplomatic progress toward opening the Strait of Hormuz continues to add to selling pressures, according to energy advisory firm Ritterbusch and Associates. The premium of Brent crude over WTI rose to its highest since May for a third day in a row.