Oil Retreats on Talks of a Phased Deal

Crude oil eased below $94 a barrel on Friday as US and Iranian negotiators explored a phased agreement to reopen the Strait of Hormuz. The proposed arrangement would reportedly involve Tehran restoring access through the strait while Washington lifts its blockade of Iranian ports. However, previous negotiations have repeatedly appeared close to a breakthrough before collapsing. A White House official said President Donald Trump remained open to discussions with Iran but argued that the US was under no pressure to negotiate given its sanctions campaign and blockade. Oil markets have remained volatile throughout the week, responding to mixed signals over prospects for peace, signs of recovering Middle East energy flows and speculation that Washington could restrict diesel exports. Despite recent gains, the US oil benchmark is down by around 2% this week, reflecting continued uncertainty over the potential reopening of the key shipping route and the broader supply outlook.

Crude oil fell to $93 per barrel on Friday, snapping a two-day rally amid reports that the US and Iran were considering a phased deal that could reopen the Strait of Hormuz and lift a US blockade on Iranian ports. Efforts to reach a breakthrough were reportedly underway on the sidelines of the UN General Assembly, with Qatari officials mediating the talks. Iran has maintained that it must retain control over Hormuz and would not accept a deal unless the US eases military pressure and removes its blockade. Meanwhile, a White House official said President Donald Trump remained open to talks with Iran but stressed that the US had little need to negotiate given its strong position following the sanctions campaign and blockade. Elsewhere, tensions in the Middle East escalated after Iran-aligned Houthi militants in Yemen launched missiles toward Saudi cities, including Yanbu and Taif. Despite recent gains, the US oil benchmark remains on track to decline about 2% for the week.

Crude oil traded near $95 a barrel on Thursday, trimming a surge that peaked at $97 amid signs that the US and Iran could be working to restore Persian Gulf exports. Reports suggested US and Iranian negotiators were exploring a deal to lift naval blockades on tankers crossing the Strait of Hormuz and ease US sanctions on Iran. Earlier, prices surged after Iran-allied Houthi militants in Yemen fired missiles at Saudi cities including Yanbu and Taif. Yanbu is a key oil export terminal on Saudi Arabia’s Red Sea coast. Saudi Arabia’s workaround for the Strait of Hormuz now carries war-risk insurance costs nearly as high as sending tankers through the strait. Only 10 commodity vessels transited Hormuz on Wednesday, below the 10-day moving average of 17. Meanwhile, the US Senate narrowly rejected a nonbinding measure demanding an end to the war with Iran.