Oil slides as Iran peace talks ease supply fears

Oil prices fell about 2% on Friday on mounting hopes for a truce between the US and Iran and talk about a possible US ban on diesel exports, even as traders worried that Houthi fighters’ attacks against Saudi Arabia could disrupt supply from the Middle Eastern producer.

Brent futures fell $2.28 (R37, 17) , or 2.1%, to settle at $104 a barrel.

US and Iranian negotiators in New York are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran, sources close to the talks said. Iran, however, said it would show no flexibility over its nuclear programme, Reopening the Strait of Hormuz called for lifting a US naval blockade on Iranian ports, among other steps, a senior Iranian official said.

“The complex is again coming under pressure … as the market continues to assess the possibility of a (US) diesel export ban while talk of diplomatic progress towards opening the Strait of Hormuz is adding to today’s selling,” analysts at energy advisory firm Ritterbusch and Associates said in a note.

Washington’s talk of a possible ban on diesel exports is widening the gap between US crude oil futures and the global Brent benchmark.

Saudi, Turkish and Pakistani military chiefs are set to discuss help for Saudi Arabia as it faces attacks by Yemen’s Iran-aligned Houthis. The attacks are disrupting oil flows from the world’s largest energy exporter. – Reuters