Oil prices moved lower on Friday but remained on track to close the week above $100 per barrel for the first time since mid-May, while the US national average diesel price moved above $6 per gallon for the first time.
Brent crude futures declined $1.65, or 1.53%, to $105.98 per barrel by 07:58 GMT, while US West Texas Intermediate fell $1.36, or 1.33%, to $101.12.
The benchmarks reversed earlier gains after the Financial Times reported that foreign ministers in the Middle East were seeking a temporary agreement with Iran to manage shipping through the Strait of Hormuz.
Both Brent and WTI rose more than 6% on Thursday and remained more than 10% higher for the week.
“Some headlines of possible new talks in the Middle East are weighing moderately on oil prices today,” UBS energy analyst Giovanni Staunovo said, adding: “I keep seeing near-term risks to the upside for oil prices, but we should expect ongoing high price volatility too”.
Hormuz Ship Transits Decline to Seven
Iran said it attacked 10 ships near the Strait of Hormuz on Wednesday following US strikes on five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps said it would escalate its response if further attacks occurred.
Preliminary tracking data showed seven vessels transited the Strait of Hormuz on Thursday, down from 11 a day earlier and below the 10-day average of 15.
Before the Iran war began in late February, the Strait of Hormuz handled approximately one-fifth of global daily oil and liquefied natural gas supplies.
Iran-aligned Houthi forces took control of Yemen’s port of Mocha on Thursday, adding another potential disruption to Red Sea shipping. The source also cited attacks from Yemen on Saudi energy facilities.
The International Energy Agency said global oil supply and demand will decline by more than previously expected this year, with the continuation of the Iran war delaying a return to normal Middle East flows into 2027.
Supply Disruptions Push US Diesel Above $6
Supply disruptions associated with the Iran war, together with Ukrainian attacks on Russian refineries, contributed to the US national average diesel price moving above $6 per gallon for the first time on Thursday, according to GasBuddy.
“Refined products, particularly diesel, are feeling a one-two punch right now,” KCM Trade chief market analyst Tim Waterer said.
“As long as both the Gulf shipping constraints and Russian refining outages remain in play, diesel and other refined products are likely to show a higher upside tendency than the broader crude market,” he added.
US President Donald Trump said the US may strike Iran’s Pickaxe Mountain near the damaged Natanz uranium enrichment facility. Trump also said he thought the war would end immediately after the November midterm elections.
China’s state planner separately announced that retail price caps for petrol and diesel will rise from September 12 by 260 yuan ($38.76) and 250 yuan per metric ton, respectively.
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