Oil prices declined on Friday as markets assessed reports that the United States and Iran were discussing a phased arrangement that could involve reopening the Strait of Hormuz.
At 04:02 ET, November Brent crude futures were down 0.4% at $106.15 per barrel, while US West Texas Intermediate crude futures fell 1.1% to $93.62 per barrel.
Both benchmarks had risen by as much as 5% during the previous session before reducing some of those gains following reports of US-Iran negotiations.
Oil markets were also monitoring security developments in Saudi Arabia after the country said it had intercepted six ballistic missiles fired by Yemen’s Iran-backed Houthis towards areas including Taif and the Yanbu region on the Red Sea.
Saudi Oil Infrastructure Remains in Focus
The missile attacks followed earlier damage to Saudi Arabia’s East-West pipeline, which disrupted crude shipments to Yanbu, a major export hub on the Red Sea.
Saudi Arabia has increased crude flows towards Yanbu, although tanker loadings from the port had not yet fully resumed, according to the supplied information.
In a note, analysts at BMO Capital Markets said concerns surrounding Saudi crude supplies are “re-emerging, as the restart of the East-West pipeline has yet to translate into a resumption of Red Sea exports, while Houthi attacks continue to intensify.”
The developments have kept attention on Saudi oil infrastructure and export routes as markets assess potential effects on regional crude supplies.
Reports Point to Possible Phased US-Iran Arrangement
Oil’s earlier gains moderated after media reports said US and Iranian negotiators in New York were exploring a phased framework for reducing the conflict.
Under the reported proposal, Iran would reopen the Strait of Hormuz in exchange for the United States lifting its economic blockade of the country.
No final agreement was reported as having been reached.
Reuters reported that 17 commodity vessels crossed the Strait of Hormuz during one recent weekend, compared with a pre-war average of approximately 125 vessels per day.
Oil shipments have continued through the waterway, although at reduced levels, according to the report.
US Crude Inventories Rise by 3 Million Barrels
US petroleum inventory data released during the week also provided information on domestic supply conditions.
Commercial crude inventories increased by 3 million barrels in the week ended September 18. Analysts had expected stocks to decline by 641,000 barrels.
Gasoline inventories fell by 1.7 million barrels, while distillate stocks declined by 400,000 barrels.
The larger-than-expected increase in crude inventories came as oil markets continued to assess geopolitical risks affecting international supply routes.
US Administration Considers Measures on Diesel Supply
US diesel markets also remained in focus after domestic prices reached record levels.
Reuters reported that the Trump administration was considering measures aimed at increasing domestic diesel supplies.
According to the report, Energy Secretary Chris Wright contacted executives at major refiners to assess support for a voluntary restriction on diesel exports.
The discussions followed separate reports of a possible 90-day export ban. The White House has denied that such a ban is planned.
No decision on a voluntary export restriction was reported as having been finalised.