Oil prices rose about 2% on Thursday after Saudi Arabia intercepted six Houthi ballistic missiles, then pared those gains on reports that the US and Iran are discussing reopening the Strait of Hormuz. Talks over the strait have become the central bargaining chip in ending the nearly seven-month US-Iran conflict, while a separate diesel-export dispute adds further pressure on energy markets.
Oil prices rose about 2% on Thursday after a Houthi missile attack on Saudi Arabia revived supply fears, but the gains cooled once reports surfaced that the United States and Iran discussed reopening the Strait of Hormuz. Earlier in the session, both crude benchmarks were up about 5%, with West Texas Intermediate on track for its first rise in seven days after falling roughly 13% over the prior six sessions.
Brent futures rose $2.04, or 2.0%, to $105.12 a barrel at 12:29 p.m. EDT, while US West Texas Intermediate crude gained $1.99, or 2.2%, to $94.15.
Houthi missiles renew supply fears
Saudi Arabia intercepted six ballistic missiles fired by Yemen's Iran-backed Houthis on Thursday, thwarting attacks on the southern province of Taif and the Yanbu area on the Red Sea, according to the Saudi-led coalition in Yemen. Saudi Arabia is separately building up crude pumping volumes through its East-West Pipeline to its Yanbu export hub, though tanker loadings have yet to resume, according to industry sources, satellite imagery and shipping data.
US and Iran weigh a Hormuz trade-off
US and Iranian negotiators in New York are exploring a phased path out of the war that would have Tehran reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade of Iran, according to sources close to the talks. But the talks face a big obstacle, as neither side wants to be first to surrender its leverage, according to two Iranian sources, two regional officials and two Western diplomatic sources.
Sanctions squeeze tightens on Iran
Iranian flights to Gulf neighbors, including Dubai, appeared to have been canceled on Thursday after a US deadline passed for global firms to halt work with Iran's airlines, a step in a campaign US President Donald Trump calls "economic D-Day." Washington has also widened secondary sanctions, targeting companies from third countries that do business with Iranian firms, as the US-Israeli war against Iran remains stalemated on the battlefield. Iran threatened on Wednesday to retaliate against any neighboring country that complies with the flight ban by rendering their airports unusable.
Diesel adds to the pressure
Diesel prices have hit record highs in recent weeks amid supply disruptions in Russia and the Middle East, and the European Union and the United States are holding high-level talks over a reported US plan to ban diesel exports, which the EU believes would hurt both sides. Moscow imposed its own export ban after Ukrainian attacks on Russian refineries and Iranian attacks on ships and energy infrastructure in the Middle East.
Politico reported that Washington is preparing a 90-day ban on diesel exports ahead of the November midterm elections, though US Energy Secretary Chris Wright has disputed the report. Analysts have warned such a ban would do little to ease high energy prices and could worsen global supplies.
Source: Commodities & Futures News
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