According to sources, U.S. and Iranian negotiators are working on a phased approach to end the conflict
Oil prices fell nearly 2% on Friday due to growing hopes for a ceasefire between the U.S. and Iran and rumors of a potential U.S. ban on diesel exports, despite concerns that escalating attacks by Houthi fighters on Saudi Arabia could disrupt supplies.
Brent crude futures dropped $2.28 (or 2.1%) to settle at $104.32 per barrel, while WTI crude fell $2.20 (or 2.3%) to $92.41.
Consequently, Brent crude ended the week with a gain of less than 1%, whereas WTI lost approximately 8% of its value.
According to sources, U.S. and Iranian negotiators are working on a phased plan to resolve the conflict, involving Tehran reopening the Strait of Hormuz and Washington lifting the economic blockade imposed on Iran.
Meanwhile, a senior Iranian official stated on Friday that Iran would show no flexibility regarding its nuclear program, even if the U.S. accepted the proposal to reopen the Strait of Hormuz.
The sector is coming under renewed pressure as the market weighs the possibility of a U.S. diesel export ban and rumors of diplomatic progress regarding the Strait of Hormuz intensify selling pressure.
Talk from Washington regarding a potential diesel export ban is widening the spread between U.S. crude oil futures and the global Brent benchmark, signaling market expectations that U.S. refiners would process less crude if diesel production were kept domestic.
The price spread of Brent crude over WTI widened for the third consecutive day, reaching its highest level since May, while U.S. gasoline futures fell nearly 4% on Friday.
Military officials from Saudi Arabia, Turkey, and Pakistan are set to discuss support for Saudi Arabia as it faces attacks from the pro-Iranian Houthi in Yemen.
The Houthis have repeatedly fired upon Saudi Arabia, disrupting oil flows from the world's largest energy exporter; these actions are part of a broader Middle East conflict that began with U.S. and Israeli attacks on Iran on February 28.
Data shows that crude oil shipments through the Strait of Hormuz reached 33.7 million barrels during the week starting September 20, with export volumes remaining roughly in line with the previous week's levels.
Meanwhile, it was reported that during his talks with Chinese President Xi Jinping, Trump clearly stated that China's support for Iran was unacceptable. Potential agreements aimed at easing trade tensions between the U.S. and China could boost economic growth and energy demand.
Zelenskyy stated that the U.S. had proposed the United Arab Emirates host a trilateral meeting with Ukraine and Russia to discuss efforts to end the war, which has been ongoing for four and a half years.
Putin stated that all proposals for resolving the war with Ukraine, ongoing for four and a half years, are on the table, but emphasized that Moscow must ultimately evaluate the option that best serves its own interests.
Meanwhile, as talks regarding a potential energy-related ceasefire between Kyiv and Moscow were underway at the UN headquarters in New York, intense drone attacks on Russian refineries continued.
Any agreement to end the Russia-Ukraine war could enable Russia to increase its energy exports. According to US energy data, Russia, an OPEC+ member, ranks as the world's third-largest crude oil producer, following the United States and Saudi Arabia.
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