Oil prices declined on Friday after US President Donald Trump said Washington would not carry out military strikes against Iran before next month’s congressional midterm elections, providing some relief to markets concerned about disruptions to Middle Eastern energy supplies.
Brent crude futures fell 72 cents, or 0.7%, to $103.53 a barrel by 02:20 GMT. US West Texas Intermediate (WTI) futures dropped 52 cents, equivalent to 0.6%, to $90.97 a barrel.
Despite the decline, Brent remained on track to finish the week higher after gaining 4% on Thursday, when increased attacks on oil shipments from the Middle East renewed concerns about supply availability.
WTI was heading for a modest weekly loss, even as Hurricane Isaias forced substantial production shutdowns in the US Gulf of Mexico.
US-Iran Discussions Ease Immediate Escalation Fears
Speaking on Thursday, Trump said the United States was holding “productive discussions” with Iran and indicated that no military action was planned before the November 3 midterm congressional elections.
His remarks followed media reports suggesting that US officials had been considering strikes against Iranian targets ahead of the vote.
The comments reduced immediate concerns about an expansion of the conflict, which is now in its eighth month and has disrupted energy shipments from the region.
Diplomatic developments also attracted attention after Iran’s Tasnim news agency reported comments from Foreign Minister Abbas Araqchi.
According to the report, Araqchi said Tehran was reviewing Washington’s response to an Iranian proposal that could allow the Strait of Hormuz to reopen within seven days.
No final agreement was reported, leaving uncertainty over the timing of any restoration of normal maritime traffic.
The Strait of Hormuz remains a major concern for energy markets because of the volume of petroleum transported through the waterway.
Before the conflict, shipments through the strait represented approximately 20% of global oil and fuel flows.
An increase in threats against commercial shipping in the Gulf and the Strait of Hormuz during October has contributed to considerable volatility in crude prices.
The prospect of renewed access to the shipping route could reduce some supply concerns, although security conditions and the progress of negotiations remain uncertain.
Washington Maintains Economic Pressure on Tehran
While diplomatic contacts continued, the United States announced further sanctions targeting Iran’s energy trade.
The measures, introduced on Thursday, covered individuals, commercial networks and 17 vessels involved in transporting Iranian crude oil, refined petroleum products and petrochemicals.
Washington is maintaining economic pressure on Tehran as part of its efforts to bring the conflict to an end.
The latest restrictions illustrate the continuing uncertainty surrounding Iranian energy exports despite reports of negotiations between the two countries.
For oil markets, the potential effects of diplomatic progress must be weighed against the possibility of further restrictions on trade and continued disruptions to shipping.
Hurricane Isaias Cuts Gulf of Mexico Oil Output
The market was also monitoring Hurricane Isaias as it approached the US Gulf of Mexico coast.
Energy companies operating offshore suspended production at several facilities as a precaution against the storm.
According to the US Marine Minerals Administration, approximately 1.3 million barrels per day of oil output had been shut in by Thursday.
The closures represented 62.9% of current oil production in the affected offshore region.
The disruption has temporarily reduced US supply, although the duration of the shutdowns will depend on weather conditions, possible infrastructure damage and the ability of operators to restart production.
As the world’s largest oil producer, the United States plays an important role in global supply balances, making interruptions in Gulf of Mexico operations relevant to international crude prices.
Oil Markets Continue to Weigh Multiple Supply Risks
Friday’s decline in crude futures followed Trump’s comments on negotiations with Iran, but several sources of supply uncertainty remained unresolved.
Brent’s expected weekly advance reflected continuing concerns about the security of Middle Eastern shipping routes, while hurricane-related shutdowns added pressure on US production.
Further developments in US-Iran negotiations, the possible reopening of the Strait of Hormuz, enforcement of American sanctions and the resumption of Gulf of Mexico production are likely to influence oil market sentiment in the coming sessions.
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