Oil prices fell about 2% on Friday as expectations for a possible U.S.-Iran truce increased, while uncertainty surrounding a potential U.S. diesel export ban added pressure to the market. Brent crude futures settled at $104.32 a barrel, down $2.28, or 2.1%, while WTI fell $2.20, or 2.3%, to $92.41. Brent finished the week up less than 1%, while WTI fell about 8%.

The possibility of a phased agreement between Washington and Tehran remains a major focus for the oil market. Negotiators in New York are discussing a potential arrangement that would see Iran reopen the Strait of Hormuz while the United States lifts its economic blockade. Iran has indicated, however, that it will not make concessions on its nuclear program as part of such an agreement.

The potential reopening of the Strait remains particularly important because approximately 20% of global oil supplies moved through the waterway before the war began. Preliminary Kpler data showed 33.7 million barrels of crude moved out of the Strait during the week beginning September 20, roughly in line with the previous week’s flows.

The market is also dealing with uncertainty over U.S. diesel exports. Talk of a possible export ban has widened the price difference between Brent and WTI to its highest level since May, suggesting expectations that U.S. refiners could reduce crude processing if they are unable to export excess diesel. U.S. gasoline futures also fell approximately 4% on Friday.

At the same time, supply risks remain around Saudi Arabia. Yemen’s Iran-aligned Houthis have continued attacks against Saudi targets, prompting Saudi, Turkish and Pakistani military officials to discuss additional support for Saudi Arabia. The attacks have already disrupted some Saudi oil flows.

Russian oil supply is another variable. A drone attack temporarily shut the Novoshakhtinsk refinery in Russia, adding to recent disruptions at Russian refining facilities. At the same time, discussions continue over a possible energy-related ceasefire between Russia and Ukraine. Any broader agreement could eventually allow Russia to increase its energy exports.

For now, the oil market is balancing the possibility of improved flows through the Strait of Hormuz against continued disruptions in Saudi Arabia and Russia. The biggest near-term variables remain the U.S.-Iran negotiations, the status of the Strait, and whether the United States moves forward with restrictions on diesel exports.

• Where: Loews Arlington Hotel
• Attending: Brian Baker (239.297.4519), David Cohen (954-729-4774), and Curtis Chandler (239-405-3365)
• Conference Website

• Where: The Westin Galleria Dallas
• Attending: David Cohen (954-729-4774), and Curtis Chandler (239-405-3365)
• Conference Website

• Where: The Westin Galleria Dallas
• Attending: Brian Baker (239.297.4519)
• Conference Website