Oil prices fell on Friday but remained on track for a weekly gain of more than 8%, while U.S. diesel prices hit a record high as attacks along Middle East shipping routes stoked fears of prolonged supply disruptions. Traders pulled back after reports of possible new talks between Iran and regional foreign ministers over the Strait of Hormuz, even as Saudi Arabia's crude output slid to its lowest level in more than three decades.
Brent crude fell $3.10, or 2.88%, to $104.53 a barrel at 1:25 p.m. CDT. U.S. West Texas Intermediate dropped $2.23, or 2.85%, to $100.25 a barrel. Both benchmarks had touched their highest levels since mid-May earlier in the session.
Traders reassess Hormuz risk
The reversal followed a Financial Times report that Middle East foreign ministers are working on a temporary deal with Iran to manage shipping through the Strait of Hormuz. That news weighed on prices a day after Brent and WTI rose more than 6% on an escalation in shipping attacks.
According to Reuters: "The things that were causing the panic yesterday are easing today," said Phil Flynn, senior analyst at the Price Futures Group, who added that the market's calm could still break over the weekend.
Vessel transits through the strait fell to seven on Thursday from 11 the previous day, preliminary ship-tracking data showed. The waterway carried about 125 commodity vessels and a fifth of global daily oil and liquefied natural gas supplies before the Iran war began in late February.
Diesel hits a record, Saudi output drops
Supply disruptions from the Iran war, along with Ukrainian attacks on Russian refineries, pushed the U.S. national average diesel price past $6 a gallon for the first time on Thursday, according to price tracker GasBuddy.
Saudi Arabia's crude supply fell by 2.3 million barrels per day on the month to 6 million bpd in August, the lowest level in more than three decades, the International Energy Agency said, citing attacks on Saudi energy facilities.
Commerzbank raised its year-end Brent forecast to $85 a barrel from $75, while lifting its diesel forecast to $1,200 a ton from $950 and its jet fuel forecast to $1,230 a ton from $980.
Two European Central Bank policymakers also opened the door to further interest rate increases if war-fueled energy costs keep pushing up prices across the euro zone.
Source: Investing.com (Commodities & Futures News)
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