Oil Prices Ease as Iran Truce Talks Share Focus with Middle East Supply Risks

Oil prices declined on Friday as markets weighed the possibility of a truce between the US and Iran against continuing risks to energy infrastructure in the Middle East.

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Brent crude fell 87 cents, or 0.82%, to $105.73 a barrel at 0212 GMT, while West Texas Intermediate (WTI) dropped $1.56, or 1.65%, to $93.05 a barrel.

The softer start followed a volatile Thursday session in which both crude benchmarks climbed as much as 5%. By the close, Brent had gained 3.4%, while WTI finished 2.7% higher. Brent also recorded its highest close since September 15.

WTI's Thursday advance was its first increase in several days. Before that recovery, the US benchmark had lost 13% over six sessions. It remained 6.42% lower for the week, while Brent was up 2.09% over the same period.

The divergence between the two benchmarks has also widened noticeably. The Brent-WTI spread reached $12.68 a barrel, it's widest since May, when the difference had moved above $13.

Concerns surrounding a possible US ban on diesel exports have contributed to the unusual gap between the benchmarks. Such a restriction could leave additional diesel supplies in the domestic US market. Brent and WTI generally move in the same direction, although WTI typically trades at a discount.

Attention, meanwhile, remains on diplomatic developments involving Washington and Tehran. US and Iranian negotiators in New York are examining a phased route out of the war, according to sources close to the talks cited in the report.

The possible arrangement would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.

The conflict began at the end of February and has disrupted around one-fifth of global oil and gas shipments. Oil prices subsequently climbed 50% in March alone, while buyers of liquefied natural gas looked elsewhere for more stable supplies.

Security concerns around regional energy infrastructure have not disappeared. Saudi Arabia intercepted six ballistic missiles launched by Yemen's Iran-backed Houthis, according to the Saudi-led coalition in Yemen cited by the report. The attempted attacks targeted the southern province of Taif and the Yanbu area on the Red Sea.

Saudi Arabia has also been increasing crude pumping volumes through its East-West Pipeline, which connects to the Red Sea export hub at Yanbu. Crude tanker loadings, however, had not resumed at the time covered by the report, based on the industry sources, satellite imagery and shipping data referenced in the original reporting.