The ongoing talks between the US and Iran to end the war have helped bring down crude oil prices in the global market. Brent and US crude oil prices fell on Friday, September 25. However, ongoing tensions in the Middle East have maintained concerns about oil supply.
Brent crude oil prices in the global market fell by 87 cents, or 0.82 percent, to $105.73 per barrel. The price of US West Texas Intermediate (WTI) also fell by $1.56, or 1.65 percent, to $93.05 per barrel.
The decline in prices came after the previous day’s increase. On Thursday, Brent crude oil prices rose by 3.4%, while WTI prices rose by 2.7%. During this time, the prices of both contracts rose by about 5% during trading.
US and Iranian negotiators in New York are discussing a phased agreement to end the war. The plan includes measures such as reopening the Strait of Hormuz and easing US economic sanctions on Iran. However, differences between the two countries could hinder the talks.
The Strait of Hormuz is a vital sea route for global energy transport. A large portion of the world’s oil and gas is transported through this route. A blockage in this route affects the availability of oil in the global market and could increase prices.
The price gap between Brent and WTI in the global market has widened to $12.68 per barrel. This gap is the largest since May.
According to experts, one reason for the difference in the prices of the two contracts is a possible ban on US diesel exports. Such a ban could increase oil availability in the US market and put pressure on local prices.
Despite talks between the US and Iran, tensions in the Middle East remain a threat to the global oil market. Saudi Arabia has reported intercepting six ballistic missiles fired by Yemen’s Houthi rebels. The attacks have raised concerns about the security of oil facilities and shipments in the region.
If progress is made in the talks and shipping through the Strait of Hormuz is restored, global oil supplies could improve. On the contrary, failure of the ceasefire or further attacks may cause prices to rise again.
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