US-Iran Truce Hopes Counter Saudi Supply Risks as Oil Prices Dip

Oil prices fell about 1% on Friday as markets weighed the possibility of a truce between the US and Iran against concerns that increasing attacks against Saudi Arabia by Houthi fighters could disrupt supply from the Middle Eastern producer.

The US and Iranian negotiators in New York are exploring a phased path out of war, which would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran. This has led to 'diplomatic hopes' helping oil prices weather the latest military strikes in the Middle East, with crude trading moderately softer despite the attacks.

Meanwhile, Saudi, Turkish, and Pakistani military chiefs are discussing help for Saudi Arabia as it faces attacks by Yemen's Iran-aligned Houthis. The Houthi strikes have disrupted oil flows from Saudi Arabia, which is the world's largest energy exporter.