NEW YORK: Global oil prices fell about 2% on Friday as hopes for a ceasefire between the United States and Iran and possible diplomatic progress toward reopening the Strait of Hormuz weighed on the market, Reuters reported.
Brent crude futures fell $2.28, or 2.1%, to settle at $104.32 a barrel, while U.S. West Texas Intermediate (WTI) crude declined $2.20, or 2.3%, to $92.41 a barrel.
For the week, Brent gained less than 1%, while WTI fell about 8%.
U.S. and Iranian negotiators in New York are exploring a phased pathway to end the conflict, according to sources familiar with the discussions. The possible arrangement could involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.
Iranian officials, however, have said Tehran would not compromise on its position over its nuclear programme, even if an agreement is reached on reopening the strategic waterway.
The market was also reacting to discussion in Washington about a possible ban on U.S. diesel exports. Analysts said such a move could force U.S. refineries to reduce crude processing if they were unable to export excess diesel production, potentially leaving refiners with higher domestic inventories.
The Strait of Hormuz remains a key factor for global oil markets. Before the conflict, the waterway carried roughly one-fifth of the world’s oil and liquefied natural gas supplies. Recent shipping data has shown a sharp decline in vessel traffic through the strait amid the conflict.
Meanwhile, a drone attack in Russia has also disrupted oil refining operations. Reuters reported that the Moscow oil refinery halted crude processing after fires broke out at its primary crude distillation units following a drone attack on Sept. 20.
The combination of diplomatic efforts, uncertainty over the Strait of Hormuz and disruptions to refining capacity continues to keep global energy markets highly sensitive to developments in the Middle East and Russia.
