Story
Oil Prices Retreat on Reports of U.S.-Iran Talks to Reopen Strait of Hormuz
Summary
Crude oil benchmarks fell from recent highs after reports emerged of a potential U.S.-Iran deal to reopen the key shipping lane, though ongoing missile attacks in the Middle East limited losses.
Oil prices edged lower in Asian trading Friday, pulling back from a sharp rally as reports of a potential phased deal between the U.S. and Iran to reopen the Strait of Hormuz tempered supply concerns.
By 20:33 ET (00:33 GMT), Brent crude futures for November delivery had fallen 0.6% to $105.94 per barrel, while West Texas Intermediate (WTI) crude futures slipped 0.8% to $93.86 per barrel. The decline followed a session where both benchmarks had surged by as much as 5% before paring gains.
Diplomatic Overtures Ease Supply Fears
The reversal in prices was primarily driven by reports that U.S. and Iranian negotiators are exploring a path to de-escalation. The potential deal would involve Tehran reopening the critical Strait of Hormuz in exchange for Washington lifting its economic blockade on Iran.
The strait is a vital chokepoint for global energy supplies. Its closure has severely impacted maritime traffic, with Reuters reporting that only 17 commodity vessels crossed during a recent weekend, a fraction of the pre-war daily average of approximately 125.
AdGeopolitical Risks and Inventories
Despite the diplomatic developments, underlying geopolitical risks kept a floor under prices. Saudi Arabia announced on Thursday that it had intercepted six ballistic missiles fired by Iran-backed Houthis from Yemen. The targets included the major Red Sea oil export hub of Yanbu, reviving concerns about the security of Saudi oil infrastructure.
Counterbalancing these supply-side risks, the latest U.S. inventory data showed an unexpected increase in crude stockpiles. Commercial crude inventories rose by 3 million barrels for the week ended Sept. 18, defying analyst expectations for a 641,000-barrel draw. However, gasoline and distillate inventories saw modest declines.
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