US-Iran Truce Hopes Weighed Against Houthi Attacks on Saudi Oil Supplies
Oil prices fell on Friday as markets weighed the possibility of a truce between the United States and Iran against concerns that escalating attacks by Houthi fighters on Saudi Arabia could disrupt supplies from the major Middle Eastern oil producer.
The US-Iran talks in New York were discussing a gradual path out of the war, which would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade on Iran. Iranian President Masoud Pezeshkian said it was up to the United States to decide when the Iran-US war would end.
Oil prices had touched a one-week high on Thursday, with both Brent and West Texas Intermediate rising as much as 5%. However, concerns over a potential US ban on diesel exports caused the spread between Brent and WTI to widen to its highest level since May. This suggests markets expect US refiners to process less crude if diesel products remain trapped in the domestic market.
The Saudi-led coalition in Yemen said it intercepted six ballistic missiles launched by the Iran-backed Houthis, and thwarted attacks targeting the Taif region in southern Saudi Arabia and the Red Sea region of Yanbu. Despite this, crude oil flows out of the Strait of Hormuz reached 33.7 million barrels so far during the week beginning September 20.