Crude oil prices moved lower on Friday after reports of discussions between the United States and Iran over a possible phased framework involving the Strait of Hormuz, while markets continued to monitor developments affecting Saudi energy infrastructure.
At 04:02 ET, November Brent futures were 0.4% lower at $106.15 a barrel. US West Texas Intermediate futures declined 1.1% to $93.62 a barrel.
The two benchmarks had gained as much as 5% on Thursday before giving back part of the advance following reports of negotiations between Washington and Tehran.
The earlier increase came after Saudi Arabia said it intercepted six ballistic missiles launched by Yemen’s Iran-backed Houthis towards locations including Taif and the Yanbu area on the Red Sea.
Saudi Export Routes Remain Under Scrutiny
Oil markets continued to monitor Saudi Arabia’s export infrastructure after earlier damage to the country’s East-West pipeline disrupted crude flows to Yanbu.
Yanbu is a major Red Sea export hub connected with oil-producing areas in eastern Saudi Arabia.
The country has been directing additional crude towards Yanbu, although tanker-loading operations at the port had not fully resumed, according to the supplied information.
BMO Capital Markets analysts said Saudi crude supply concerns 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 combination of pipeline disruption and missile attacks has kept regional oil infrastructure among the factors being monitored by crude markets.
US and Iran Reportedly Discuss Phased Hormuz Framework
Oil prices reduced their earlier gains following media reports of talks between US and Iranian negotiators in New York.
The reported framework would involve Iran reopening the Strait of Hormuz, while the United States would lift its economic blockade of Iran.
The reports did not indicate that the two sides had reached a final agreement.
Reuters reported that only 17 commodity vessels passed through the Strait of Hormuz during one recent weekend, compared with an average of approximately 125 vessels per day before the war.
Crude shipments have continued through the strait but at reduced levels, according to the report.
US Crude Stocks Increase Against Expectations for a Decline
US inventory figures released during the week showed commercial crude stocks increasing by 3 million barrels in the week ended September 18.
Analysts had expected inventories to decline by 641,000 barrels.
Gasoline stocks decreased by 1.7 million barrels, while inventories of distillates fell by 400,000 barrels.
The increase in crude inventories provided an additional supply indicator as traders continued to monitor developments affecting international oil flows.
Diesel Supply Measures Reportedly Under Consideration
US diesel prices also remained in focus after reaching record levels.
Reuters reported that the Trump administration was considering options to increase the availability of diesel in the domestic market.
Energy Secretary Chris Wright has contacted executives at major refiners to determine their views on a voluntary restriction on diesel exports, according to the report.
The discussions followed separate reports suggesting that a 90-day export ban could be considered. The White House denied that such a ban was planned.
No final decision on voluntary export restrictions had been reported.
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