Oil prices ease as US-Iran truce hopes counter Saudi supply risk

By Scott DiSavino

NEW YORK, Sept 25 (Reuters) - Oil prices ‌fell about 1% on ​Friday as ​markets weighed the possibility of a truce between the US and Iran against concerns that increasing attacks against Saudi Arabia by Houthi fighters could disrupt supply from the Middle Eastern producer.

Brent futures were down $1.14, or 1.1%, at $105.46 a ‌barrel by 10:03 a.m. EDT (1403 GMT), while West Texas Intermediate (WTI) crude fell $1.05, also 1.1%, to $93.56.

That put Brent up ⁠about 2% for the week and WTI down about 7%.

US and Iranian negotiators in New York are exploring a phased path out of war that would involve Tehran ‌reopening the Strait of Hormuz and Washington ‌lifting its economic blockade of Iran, sources close to the talks said.

In the Middle East, however, Saudi, Turkish and Pakistani military chiefs are to discuss help for Saudi Arabia as it faces attacks by Yemen's Iran-aligned Houthis.

"Diplomatic hopes are essentially helping oil prices weather ​the latest military strikes in the Middle East, with crude trading moderately softer despite the attacks," said Tim Waterer, chief analyst at KCM Trade.

The Houthis have launched strikes on the Saudi-backed government in Yemen and repeatedly fired into Saudi Arabia, disrupting oil flows from the ⁠world's largest energy exporter, as part of a wider Middle East war that began with US and Israeli strikes on Iran on February 28.

OIL FLOWING

Crude oil flows out of the ​Strait of Hormuz reached 33.7 million barrels so far in the week starting September 20, preliminary ship-tracking data from Kpler showed on Friday, putting exports roughly on track with the previous week's levels.

The traffic ​comprised 19 tankers, of which 17 are very large crude carriers (VLCCs) that ‌can carry 2 million barrels of oil, the data showed. Most of the tankers are laden with crude from Saudi Arabia, followed by Iraq.

Before the start of the Iran war, about 20% of the world's oil ⁠supplies moved through the strait.

In the US, Washington's talk of a possible ban on diesel exports is widening the gap between US crude oil futures and the global Brent benchmark, a signal that markets expect US refiners to process less crude oil if their diesel output gets stuck at home.

The premium of ⁠Brent crude over WTI rose to its highest since May for a third day in a row on Friday.

Separately, US President Donald Trump made clear ​during talks with Chinese President Xi Jinping that Chinese help for Iran is unacceptable, US Ambassador to China David Perdue said on Friday.

Any agreements to reduce trade tensions between the US and China could boost economic growth and demand for energy.

RUSSIAN AND UKRAINE

The US has proposed that the United Arab Emirates ‌host a trilateral meeting with Ukraine and Russia to discuss efforts to end their 4-1/2-year-long war, Ukrainian President Volodymyr Zelenskiy said on Friday.

A drone attack damaged the Novoshakhtinsk oil refinery in Russia, forcing it ‌to suspend operations temporarily, Governor Yuri Slyusar said.

Heavy drone strikes on Russian refineries come after discussions at UN headquarters in New York on a potential energy-related ⁠ceasefire between Kyiv and Moscow.

Any deal to end the ‌Russia-Ukraine war could allow Russia to export ​more energy. Russia, an OPEC+ member, was the world's third-biggest crude oil producer behind the US and Saudi Arabia in 2025, according to US energy data.

(Reporting by Scott DiSavino, Stephanie Kelly, Helen Clark and Sethuraman NR; Editing by Mark ‌Potter, Kirsten Donovan)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Oil gains on little sign of progress in US-Iran talks
• Rubio says Iran deal would require hard work over time
• Seventh person killed by bear in Russian region in a month as spate of attacks grows