US-Iran Tensions Ease as Oil Prices Slide

Oil prices fell about 2% on Friday as hopes for a truce between the US and Iran grew, along with talk of a possible US ban on diesel exports. The Brent futures price dropped $2.28, or 2.1%, to settle at $104.32 a barrel, while West Texas Intermediate (WTI) crude fell $2.20, or 2.3%, to settle at $92.41.

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. However, Iran said it will show no flexibility over its nuclear program even if the US accepts its proposal to reopen the Strait.

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