US-Iran Diplomacy Lifts Oil Prices Amid Wider Conflict

Oil prices slid about 2% on Friday as hopes for a truce between the US and Iran grew, alongside talk of a possible US ban on diesel exports. The price drop was driven by mounting diplomatic efforts to end the conflict in the Middle East.

Brent futures fell $2.28, or 2.1%, to settle at $104.32 a barrel, while West Texas Intermediate crude dropped $2.20, or 2.3%, to settle at $92.41. This put Brent up less than 1% for the week and WTI down about 8%.

US and Iranian negotiators in New York are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran, sources close to the talks said. However, Iran's senior official stated that it will show no flexibility over its nuclear program even if the US accepts its proposal.

The US talk of a possible ban on diesel exports is widening the gap between US crude oil futures and the global Brent benchmark, signaling that markets expect US refiners to process less crude oil if their diesel output gets stuck at home.