Brent crude hovers around $106 amid hopes of Strait of Hormuz deal
Oil prices saw a drop on Friday after reports surfaced that the United States and Iran were exploring a phased agreement that could reopen the Strait of Hormuz, easing fears over supply disruptions linked to the conflict.
Brent slipped toward $105.6 a barrel after rising over 7 per cent over the previous two sessions, while West Texas Intermediate traded below $94, amid hopes of restored Middle East flows as discussions were reportedly taking place on the sidelines of the United Nations General Assembly.
Physical markets showed acute tightness, with record premiums paid for prompt barrels at Cushing, Oklahoma, the main US storage hub, according to multiple reports.
Dated Brent has been trading at a wide premium to futures in Europe, underscoring scarce near-term supply. Brent remains over 70 per cent higher for the year, adding to global inflationary pressure.
White House informed that US President Donald Trump remained open to discussions with Iran while stressing the US would not negotiate from a position of weakness.
Oil markets remain highly volatile with the US-Iran conflict approaching its seventh month. Changing expectations around the war, and speculations around Washington restricting diesel exports kept the prices volatile.
Iran has maintained that it has sovereign control over the Strait of Hormuz, while the US has said the status of the waterway should revert to normalcy before the conflict and imposed a blockade on Iranian ports.
Saudi Arabia on Thursday intercepted missiles headed toward Yanbu and Taif, while Iran-backed Houthi militants launched further strikes against the Arabian kingdom.
Around six ballistic missiles were reportedly intercepted and Saudi cautioned that further flare-up from the Iran-backed militants in Yemen would be dealt with firmly. Meanwhile French President Emmanuel Macron said France would deploy troops to help secure a Saudi energy facility.
