Oil prices fall as Iran signals openness to diplomacy to end US-Iran war

SINGAPORE: Oil prices slipped on Thursday after surging around 4% in the previous session, as Iran signalled that it remained open to diplomacy aimed at ending its war with the United States.

The decline reflected growing hopes that diplomatic efforts could eventually ease disruptions to oil supplies, although Tehran and Washington remain divided over the terms of any agreement.

Brent crude futures fell 92 cents, or 0.9%, to around $102.16 a barrel, while US West Texas Intermediate crude declined 77 cents, or 0.8%, to $91.39. Reuters reported that the market was reassessing some of the geopolitical risk premium built into prices during the recent escalation.

A senior Iranian official told Reuters that Tehran was reviewing Washington’s response to Iranian peace proposals and maintained that diplomacy must continue. The proposals include lifting a US naval blockade on Iranian ports and reopening the Strait of Hormuz, a crucial route for global energy shipments.

The comments came after Iranian President Masoud Pezeshkian addressed the United Nations General Assembly, where he said Tehran would not surrender to US pressure. At the same time, Iranian officials have continued to discuss possible diplomatic pathways through mediators.

The Strait of Hormuz remains central to the oil market outlook. Iran’s security chief Mohsen Rezaei said on Wednesday that the waterway would not reopen until Tehran’s conditions were met. Any sustained disruption could keep a significant risk premium in crude prices because of the importance of the route to international energy trade.

US Secretary of State Marco Rubio said reaching an agreement with Iran would require difficult negotiations over time, while noting that US President Donald Trump retained military options.

Market participants were also watching US fuel policy after reports of a possible 90-day diesel export ban. The White House denied that such a plan was being prepared, while Energy Secretary Chris Wright had previously said an export ban would not be effective.

Diesel futures fell sharply during trading after the reports emerged. Analysts have warned that restricting exports could tighten global fuel supplies rather than reduce energy costs.

Meanwhile, US crude inventories increased by about 3 million barrels last week to 426.4 million barrels, according to Energy Information Administration data. Analysts surveyed by Reuters had expected inventories to decline by roughly 641,000 barrels.

For oil traders, the competing signals leave the market highly sensitive to developments in Washington and Tehran. A meaningful diplomatic breakthrough could reduce fears over supply disruptions, while renewed tensions around the Strait of Hormuz could quickly push prices higher.