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Oil Prices Ease on US-Iran Truce Hopes, but Geopolitical Risks Remain
Summary
Crude oil prices fell in early trading as signs of a potential U.S.-Iran de-escalation overshadowed recent attacks on Saudi Arabian oil infrastructure. Both Brent and WTI contracts saw modest declines after a volatile week that saw prices hit a one-week high.
Oil prices declined in early trading Friday as the market weighed the prospect of a U.S.-Iran truce against persistent supply-side risks from attacks on Saudi Arabian energy facilities. The slight pullback follows a week of significant volatility that pushed crude benchmarks to a one-week high.
As of 0032 GMT, the global benchmark Brent crude fell 74 cents, or 0.69%, to trade at $105.85 a barrel. The U.S. benchmark, West Texas Intermediate (WTI) crude, was down 81 cents, or 0.86%, at $93.80 a barrel, according to a Reuters report.
Diplomatic Overtures Weigh on Prices
The primary driver of the bearish sentiment was news of potential de-escalation between Washington and Tehran. Sources close to negotiations in New York indicated that the two sides are exploring a phased approach to end hostilities, which could involve Iran reopening the critical Strait of Hormuz shipping lane in exchange for the U.S. lifting its economic blockade.
Adding to the diplomatic hopes, Iranian President Masoud Pezeshkian stated in a Fox News interview that it was up to the U.S. to decide on an end to the conflict. "Diplomatic hopes are essentially helping oil prices weather the latest military strikes in the Middle East," said Tim Waterer, chief analyst at KCM Trade.
Middle East Tensions Provide a Floor
AdDespite the potential for a truce, ongoing attacks in the region are keeping a floor under prices. The Saudi-led coalition in Yemen reported that it intercepted six ballistic missiles fired by Iran-backed Houthi rebels targeting the southern province of Taif and the Red Sea hub of Yanbu.
These events underscore the continued threat to key energy infrastructure. Waterer noted that the ongoing attacks "serve as a clear reminder that critical oil assets remain firmly in the firing line," preventing a steeper price decline.
A Volatile Week in Review
Friday's modest losses contrast with a sharp rally on Thursday, when both contracts surged. Brent settled up 3.4% and WTI rose 2.7%, marking Brent's highest close since September 15. The gains on Thursday were the first in several days for WTI, which had fallen 13% over the previous six sessions.
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