Oil Prices Fall 2% As US-Iran Truce Hopes Weigh On Geopolitical Risk Premium.
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Brent and WTI crude fell about 2% as US-Iran negotiations explore a phased truce to reopen the Strait of Hormuz, offsetting supply concerns in Saudi Arabia. Crude oil prices fell approximately 2% on Friday, pressured by mounting expectations of a potential diplomatic truce between the United States and Iran. Negotiators meeting in New York have been exploring a phased framework that could see Tehran reopen the vital Strait of Hormuz in exchange for Washington lifting its economic and naval blockades. Benchmark Brent crude fell $2.28 (2.1%) to settle at $104.32 a barrel, while US West Texas Intermediate (WTI) dropped $2.20 (2.3%) to $92.41. Despite the weekly close, market sentiment remains volatile: persistent regional security risks—including Houthi drone and missile activity targeting infrastructure in Saudi Arabia—alongside discussions around a possible US diesel export ban, continue to influence global fuel pricing and widen the Brent-WTI spread.
Oil prices fell about 2% on Friday as growing expectations of a possible truce between the United States and Iran weighed on the geopolitical risk premium, while discussions over a potential US ban on diesel exports added further pressure to crude markets.
Brent crude futures fell $2.28, or 2.1%, to settle at $104.32 a barrel, while US West Texas Intermediate (WTI) crude declined $2.20, or 2.3%, to $92.41.
Despite Friday’s decline, Brent gained less than 1% over the week, while WTI ended the week about 8% lower. The contrasting weekly performance reflected changing expectations for regional supply disruptions and US fuel-market conditions.
US and Iranian negotiators in New York are reportedly exploring a phased route toward ending the conflict. The proposed arrangement could involve Iran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran, potentially easing restrictions on regional oil flows.
Iran, however, has indicated that any agreement over the waterway would not necessarily mean flexibility on its nuclear programme. A senior Iranian official told Reuters that Tehran would maintain its position even if Washington accepted its proposal concerning the Strait of Hormuz.
Markets were also reacting to discussion of a possible US ban on diesel exports. Such a measure could leave more diesel inside the United States, potentially reducing refinery demand for crude and widening the price gap between Brent and WTI.
The Brent premium over WTI reached its highest level since May for a third consecutive day, while US gasoline futures fell about 4% on Friday. The moves indicate that traders are increasingly assessing the potential impact of US fuel-market policy alongside Middle East supply risks.
At the same time, concerns over Saudi Arabian oil supplies remain. Yemen’s Houthis have continued attacks involving Saudi Arabia, raising concerns about potential disruptions in output and export infrastructure. Preliminary Kpler data showed crude flows through the Strait of Hormuz reached 33.7 million barrels in the week beginning September 20, roughly in line with the previous week’s levels.
Before the current conflict, around 20% of global oil supplies passed through the Strait of Hormuz. Any sustained improvement in shipping through the waterway could therefore reduce the supply-risk premium in crude prices, while renewed attacks could put upward pressure on the market.
