Oil prices fell Friday as reports that US and Iranian negotiators are exploring a phased deal to reopen the Strait of Hormuz eased some supply concerns.
Brent crude was trading at $106.03 a barrel, down 0.53%, as of late Friday morning.
It had opened at $107.06 and traded in a range of $104.40 to $107.17 during the session.
West Texas Intermediate crude stood at $93.82, down 0.84%, after opening at $94.53 and trading between $92.09 and $94.73.
A volatile 24 hours
Both benchmarks climbed as much as 5% during Thursday’s session, with Brent touching an intraday high of $108.23, before paring gains on reports of the US-Iran talks.
Brent ultimately settled Thursday at $106.60, up 3.4%, while WTI closed at $94.61, up 2.7%.
Thursday’s surge followed Saudi Arabia’s announcement that it had intercepted six ballistic missiles fired by Yemen’s Iran-backed Houthis toward the Yanbu and Taif regions.
The Saudi-led coalition confirmed all six projectiles were shot down.
The attack revived concerns about Saudi oil infrastructure, particularly given earlier damage to the kingdom’s East-West pipeline that had already disrupted crude shipments to Yanbu, a major Red Sea export hub.
Iran’s delegation at the United Nations General Assembly in New York floated a proposal to reopen the Strait of Hormuz within seven days, contingent on the US easing military pressure and lifting its blockade on Iranian ports, with Qatari officials mediating the discussions.
Iranian Foreign Minister Abbas Araghchi said Thursday that Iranian mediators had submitted the plan to the White House.
Analysts flag renewed supply risk
In a note cited by Investing.com, analysts at BMO Capital Markets said Saudi crude supply concerns are “re-emerging, as the restart of the East-West pipeline has yet to translate into a resumption of Red Sea exports, while Houthi attacks continue to intensify.”
JPMorgan told clients it had lost visibility on oil’s direction and, for the first time since the war began in February, no longer has a clear baseline scenario for the market.
US inventories add a separate signal
Commercial crude stocks rose by 3 million barrels in the week ended September 18, versus analyst expectations for a 641,000-barrel draw, while gasoline inventories fell 1.7 million barrels and distillates declined 400,000 barrels, government data showed.
Diesel markets have stayed in focus separately, after US diesel prices climbed to record levels.
Energy Secretary Chris Wright has contacted major refining executives to gauge support for a voluntary restriction on diesel exports, following earlier reports of a possible 90-day export ban that the White House has denied.
The Brent-WTI spread has widened to $12.68, its largest gap since May, partly reflecting that diesel-export uncertainty.
Why Yanbu matters so much right now
The renewed Houthi attacks near Yanbu carry outsized weight because the port has become one of Saudi Arabia’s few remaining reliable export outlets since the Iran war effectively closed the Strait of Hormuz.
Saudi Arabia restarted its East-West Pipeline on September 22, after Houthi drone strikes had knocked out two of its 11 pumping stations earlier in the month, forcing a shutdown on September 13.
The 1,200-kilometre pipeline, also known as the Petroline, carries crude from the kingdom’s eastern oil fields to Yanbu on the Red Sea, rerouting roughly 4 million barrels a day, or about 4% of global supply, that would otherwise transit Hormuz.
With that pipeline only recently back online and pumping at a reduced rate, any fresh threat to Yanbu itself risks undoing one of the few workarounds keeping Saudi crude reaching international markets.
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