Oil prices slide as hopes of US-Iran peace talks grow

Oil prices slide as hopes of US-Iran peace talks grow

Oil prices fell on Friday as concerns over potential disruptions to Middle East supplies eased after US President Donald Trump ruled out an attack on Iran before the November 3 midterm elections, citing progress in diplomatic talks.

Brent crude futures dropped $1.37, or 1.3%, to $102.91 a barrel by 0450 GMT, while US West Texas Intermediate (WTI) crude declined $1.09, or 1.2%, to $90.40 a barrel.

Despite Friday’s losses, Brent remained on track for a weekly gain after rising 4% on Thursday. WTI, meanwhile, was heading towards a slight weekly decline.

Trump said on Thursday that Washington was holding “productive discussions” with Tehran and had no plans to attack Iran before the upcoming elections. His remarks followed media reports suggesting that the US president had considered military action against Iran before November 3.

Iran’s Tasnim news agency reported that Foreign Minister Abbas Araghchi was reviewing Washington’s response to Tehran’s proposal to reopen the Strait of Hormuz within seven days.

XS.com analyst Linh Tran said the easing of tensions needed further confirmation through meaningful progress in negotiations and improved shipping security in the strategic waterway.

Meanwhile, Washington continued to increase economic pressure on Tehran. On Thursday, the US imposed sanctions on individuals, networks and 17 vessels accused of transporting Iranian crude oil, petroleum products and petrochemicals.

Oil markets have experienced sharp fluctuations this week amid growing threats to shipping across the Gulf and the Strait of Hormuz. Before the war, the vital passage handled shipments equivalent to around 20% of global oil and fuel supplies.

Additional pressure on global fuel markets could ease as China prepares to resume refined fuel exports following a temporary suspension during its Golden Week holiday. Reuters reported on Friday, citing sources, that the move could help improve supplies of diesel, gasoline and jet fuel.

The International Energy Agency also agreed this week to speed up the release of oil stocks and prioritise diesel supplies under a plan introduced in March.

Separately, Hurricane Isaias has disrupted oil production in the Gulf of Mexico. According to the US Marine Minerals agency, producers had shut down approximately 1.3 million barrels per day of output by Thursday, representing 62.9% of the region’s current production.