Oil Prices Ease Amid Hope for US-Iran Truce, Concerns Persist
Oil prices experienced a mild decline on Friday as markets balanced cautious optimism over a potential truce between the United States and Iran with ongoing concerns about attacks on critical oil infrastructure in the Middle East.
Brent crude futures fell by 87 cents, or 0.82%, settling at $105.73 per barrel, while West Texas Intermediate (WTI) crude dropped $1.56, or 1.65%, to $93.05 per barrel. This moderate downturn followed a week of heightened volatility wherein prices saw significant gains, with both Brent and WTI surging up to 5% earlier in the week.
Brent recorded a weekly gain of 2.09%, closing at its highest level since mid-September, whereas WTI saw a 6.42% weekly decline, partly due to its sharp falls over the previous six sessions. The spread between Brent and WTI widened to $12.68, the largest margin since May, influenced by concerns over a potential U.S. ban on diesel exports that could saturate the domestic market and regional risk factors.
Tim Waterer, Chief Analyst at KCM Trade, noted the unusual divergence in pricing reflected the differing risk profiles in their respective regions. The volatility also underscored the precarious nature of supply amid geopolitical tensions.
Negotiations in New York between U.S. and Iranian officials are reportedly exploring a phased agreement aimed at de-escalating conflict and reopening the strategic Strait of Hormuz, a vital artery for global oil shipments. This would include Washington easing its economic sanctions on Tehran. Since the outbreak of conflict in late February, disruptions have curtailed about 20% of worldwide oil and gas shipments, fuelling significant price surges and prompting liquefied natural gas buyers to diversify their sources.
Iranian President Masoud Pezeshkian emphasized that the decision to end the conflict lies with the United States. Separately, the Saudi-led coalition reported intercepting six ballistic missiles launched by Iran-backed Houthi rebels targeting regions including Taif and the Red Sea port of Yanbu, highlighting the persistent threats against vital energy infrastructure.
Saudi Arabia is reportedly increasing oil throughput via its East-West Pipeline to bolster exports through Yanbu, although full crude tanker operations have yet to resume.
The unfolding developments continue to keep oil markets on edge, as stakeholders monitor diplomatic efforts and security risks intertwined with energy supply stability.
