Oil prices ease as Iran truce hopes offset fears of fresh attacks

LONDON: Oil prices edged lower on Friday as traders weighed growing hopes of a possible ceasefire between the United States and Iran against renewed concerns over attacks targeting key energy infrastructure in the Middle East.

Brent crude fell 87 cents, or 0.82%, to $105.73 a barrel by 0212 GMT, while US West Texas Intermediate (WTI) dropped $1.56, or 1.65%, to $93.05.

The modest decline followed a highly volatile week in which both benchmarks surged by as much as 5% during Thursday’s trading session. Brent ultimately settled 3.4% higher, while WTI gained 2.7%.

Market attention has increasingly focused on diplomatic efforts between Washington and Tehran. Sources familiar with the discussions said US and Iranian negotiators in New York were examining a possible phased arrangement that could include the reopening of the Strait of Hormuz by Iran and the easing of US economic restrictions.

The conflict, which began in late February, has disrupted a significant share of global oil and gas shipments, contributing to a sharp rise in energy prices and forcing liquefied natural gas buyers to seek alternative sources of supply.

Iranian President Masoud Pezeshkian said on Thursday that Washington would ultimately have to decide whether the conflict should end, placing responsibility for a possible resolution on the United States.

Meanwhile, security concerns remained elevated after Saudi Arabia said it had intercepted six ballistic missiles launched by Yemen’s Iran-backed Houthis. The attacks targeted areas including Taif and the Yanbu region along the Red Sea.

Analysts said the continued attacks were keeping energy markets on edge because vital oil infrastructure remains exposed to regional conflict.

Saudi Arabia is also increasing crude flows through its East-West Pipeline toward the Red Sea export hub of Yanbu. However, industry sources, satellite imagery and shipping data indicated that crude tanker loadings from the hub had not yet resumed.

The widening gap between Brent and WTI prices also highlighted differing regional risks. The spread reached $12.68, its widest level since May, as concerns over possible US diesel export restrictions added pressure to the American benchmark.