Oil Slides on Phased Deal to Reopen Strait of Hormuz
Oil prices slipped to $106 on Friday as reports of a potential deal between the US and Iran to reopen the Strait of Hormuz eased supply concerns. The phased deal, which could see the strait reopened within seven days, is contingent on the US easing military pressure and lifting its blockade on Iranian ports.
According to analysts at BMO Capital Markets, Saudi crude supply concerns are 're-emerging' as the restart of the East-West pipeline has yet to translate into a resumption of Red Sea exports. The Houthi attacks near Yanbu have also intensified, reviving concerns about Saudi oil infrastructure.
The Brent-WTI spread widened to $12.68, its largest gap since May, partly due to uncertainty over diesel exports. Energy Secretary Chris Wright has contacted major refining executives to gauge support for a voluntary restriction on diesel exports, following earlier reports of a possible 90-day export ban that the White House has denied.