US-Iran Talks Send Oil Prices Tumbling Amid Middle East Tensions

Oil prices dropped on Friday after reports emerged that the US and Iran were exploring a potential deal to reopen the Strait of Hormuz, tempering some supply concerns. The benchmarks for November futures fell 0.4% to $106.15 per barrel, while December futures slipped 1.1% to $93.62 per barrel.

The gains from Thursday's session, which saw oil prices climb as much as 5%, were partially erased by the news of US-Iran talks. The previous day's rally was fueled by concerns over Saudi Arabia's oil infrastructure and export routes, particularly after a Houthi missile attack on the kingdom.

Analysts at BMO Capital Markets noted that Saudi crude oil supply concerns are 're-emerging' due to the continued disruption of Red Sea exports. However, US inventory data this week offered some counterbalance to these concerns, with commercial crude stocks rising by 3 million barrels in the week ended September 18.

The Trump administration is also considering ways to increase domestic diesel supplies, including a voluntary restriction on diesel exports, which could help alleviate record-high prices for the fuel.