Oil prices fall as US-Iran truce hopes offset Saudi supply concerns

Business

LONDON, United Kingdom (NPA) — Oil prices fell on Friday as markets weighed prospects for a possible truce between the United States and Iran against renewed concerns over attacks on Saudi Arabia and their potential impact on crude supplies.

Brent crude was trading around $105.5 a barrel, while US West Texas Intermediate (WTI) was below $93 a barrel during morning trading, with both benchmarks easing after a sharp rise in the previous session.

The decline followed reports that US and Iranian negotiators in New York were exploring a phased arrangement that could include the reopening of the Strait of Hormuz and changes to US economic restrictions on Iran.

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The diplomatic developments have eased some of the supply-risk premium in oil markets, although concerns remain over the security of energy infrastructure in the Middle East.

Iranian President Masoud Pezeshkian said on Thursday that the United States could determine when the conflict ends, as diplomatic contacts continued on the sidelines of the United Nations General Assembly.

Oil prices had risen sharply on Thursday after Saudi Arabia said it had intercepted missiles launched by Iran-backed Houthi fighters. Brent settled at $106.60 a barrel, while WTI closed at $94.61, with both contracts gaining about 3 per cent.

Saudi Arabia said six ballistic missiles launched from Yemen were intercepted during attacks targeting areas including Taif and the Yanbu region on the Red Sea. The renewed attacks have heightened concerns about possible disruption to supplies from one of the world’s major oil producers.

Saudi Arabia has also been increasing crude flows through its East-West Pipeline, which provides an alternative route to the Red Sea export terminal at Yanbu and bypasses the Strait of Hormuz.

The Strait remains a major focus for the oil market because of its importance to global energy shipments. Preliminary shipping data indicated that crude flows through the waterway remained broadly in line with the previous week, despite continuing regional security concerns.

The gap between Brent and WTI has also widened significantly, reflecting different supply conditions in international and US markets. The spread was reported at more than $12 a barrel, its widest level since May.

Market volatility has remained elevated as traders assess developments in the US-Iran conflict, Saudi export capacity and the security of shipping routes through the Strait of Hormuz and the Bab el-Mandeb.

The US Energy Information Administration has also reported that flows through the Strait of Hormuz and Bab el-Mandeb remain constrained and variable, with Middle Eastern oil production disruptions expected to remain significant in the fourth quarter of 2026.