Oil slips as US-Iran truce hopes offset fresh Saudi security risks

Oil prices edged lower on Friday, September 25, as markets weighed the prospect of a truce between the United States and Iran against renewed security risks in Saudi Arabia following a week of sharp price swings.

Brent crude was down 87 cents, or 0.82%, at $105.73 a barrel at 0212 GMT, while West Texas Intermediate (WTI) fell $1.56, or 1.65%, to $93.05 a barrel, Reuters data shows.

The softer opening followed a volatile session on Thursday, when both benchmarks climbed as much as 5% before paring gains. Brent settled 3.4% higher at $106.60 a barrel, its highest close since September 15, while WTI gained 2.7% to $94.61, ending a six-session losing streak during which it had fallen about 13%.

For the week, WTI was down 6.42%, while Brent was up 2.09%. The spread between the two benchmarks stood at $12.68, its widest since May, when it exceeded $13.

Concerns over a possible US ban on diesel exports, which could increase domestic supplies and weigh on US prices, have contributed to the widening gap. Brent and WTI typically move in tandem, although WTI normally trades at a discount to Brent.

"The unusually wide WTI-Brent spread also reflects the different regional risk profiles at play," said Tim Waterer, chief analyst at KCM Trade.

Meanwhile, US and Iranian negotiators in New York are exploring a phased route out of the war that could involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran, according to sources familiar with the talks.

Since the war began in late February, around one-fifth of global oil and gas shipments have been curtailed, pushing oil prices up by 50% in March alone and prompting liquefied natural gas buyers to seek alternative sources of supply.

Iranian President Masoud Pezeshkian said on Thursday that Washington must decide whether to end the war.

"It's America that must choose whether it wants to end this or not," Pezeshkian said in an interview aired by Fox News.

At the same time, Saudi Arabia intercepted six ballistic missiles launched by Yemen's Iran-backed Houthis, thwarting attacks targeting the southern province of Taif and the Yanbu area on the Red Sea, according to the Saudi-led coalition in Yemen.

The attacks underscore the continuing risks to regional energy infrastructure. "Ongoing attacks serve as a clear reminder that critical oil assets remain firmly in the firing line," Waterer said.

Saudi Arabia is increasing crude pumping volumes through its East-West Pipeline, which runs to the Red Sea export hub of Yanbu. However, crude tanker loadings have yet to resume, according to industry sources, satellite imagery and shipping data.

By Tamilla Hasanova