Oil Falls but on Track for 8% Weekly Gain on Supply Concerns; US Diesel Hits Record High

WHITING, INDIANA - SEPTEMBER 08: An aerial view shows the sprawling BP refinery on September 08, 2026 in Whiting, Indiana. (Photo by SCOTT OLSON / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
WHITING, INDIANA - SEPTEMBER 08: An aerial view shows the sprawling BP refinery on September 08, 2026 in Whiting, Indiana. (Photo by SCOTT OLSON / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
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Oil Falls but on Track for 8% Weekly Gain on Supply Concerns; US Diesel Hits Record High

WHITING, INDIANA - SEPTEMBER 08: An aerial view shows the sprawling BP refinery on September 08, 2026 in Whiting, Indiana. (Photo by SCOTT OLSON / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
WHITING, INDIANA - SEPTEMBER 08: An aerial view shows the sprawling BP refinery on September 08, 2026 in Whiting, Indiana. (Photo by SCOTT OLSON / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

Oil prices fell on Friday but remained on course for a weekly gain of more than 8% while US diesel prices hit a record high as attacks along Middle East shipping routes stoked concerns about prolonged supply disruptions.

Brent crude futures were down $3.45, or 3.21%, to $104.18 a barrel at 1132 GMT.

US West Texas Intermediate crude fell $2.96, or 2.89%, to $99.52 a barrel. Both benchmarks hit their highest levels since mid-May earlier in the session.

The benchmarks reversed early gains after the Financial Times reported that foreign ministers in the Middle East are trying to work out a temporary deal with Iran to manage shipping through the Strait of Hormuz.

Brent and WTI rose more than 6% on Thursday after an escalation in shipping attacks in the region.

"Some headlines of possible new talks in the Middle East are weighing moderately on oil prices today," said UBS energy analyst Giovanni Staunovo. "I keep seeing near-term risks to the upside for oil prices, but we should expect ongoing high price volatility too."

In a further potentially significant development for Riyadh, satellite imagery showed smoke on Thursday in the vicinity of Saudi Arabia's East-West Pipeline, which has become a vital means for the kingdom to divert its crude exports away from Hormuz.

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 on Friday, citing attacks on Saudi energy facilities.

Adding to concerns over regional oil flows, Yemen's Iran-aligned Houthis on Friday reached the island of Perim in the Bab el-Mandeb Strait, four Yemeni government sources told Reuters, potentially tightening their grip on one of the world's vital shipping routes.

Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran's Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.

Vessel transits at the Strait of Hormuz fell to seven on Thursday from 11 the previous day, preliminary ship-tracking data showed on Friday.

The strait handled about 125 commodity vessels and one-fifth of global daily oil and liquefied natural gas supplies before the Iran war began in late February.

Meanwhile, two European Central Bank policymakers opened the door on Friday to further interest rate increases if a war-fuelled rise in energy prices continues and pushes up other prices in the euro zone.

SUPPLY DISRUPTIONS LIFT FUEL PRICES

Oil supply disruptions due to the Iran war, along with Ukrainian attacks on Russia's refineries, pushed the US national average diesel price past $6 a gallon for the first time on Thursday, according to price tracker GasBuddy.

"Refined products, particularly diesel, are feeling a one-two punch right now," said Tim Waterer, chief market analyst at KCM Trade.

"As long as both the Gulf shipping constraints and Russian refining outages remain in play, diesel and other refined products are likely to show a higher upside tendency than the broader crude market," he added.

Commerzbank raised its year-end Brent crude forecast to $85 a barrel from $75, while increasing its diesel forecast to $1,200 a ton from $950 and its jet fuel forecast to $1,230 a ton from $980.



AI Powers UK Economic Growth in Third Quarter

Growth was driven by the services sector, particularly computer programming.  Brook Mitchell / AFP
Growth was driven by the services sector, particularly computer programming. Brook Mitchell / AFP
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AI Powers UK Economic Growth in Third Quarter

Growth was driven by the services sector, particularly computer programming.  Brook Mitchell / AFP
Growth was driven by the services sector, particularly computer programming. Brook Mitchell / AFP

Britain's economy expanded 0.7 percent in the third quarter, official data showed Thursday, as spending on the AI boom helped offset higher energy prices and other disruptions caused by the US-Iran war, AFP reported.

The July-September reading for gross domestic product was an acceleration from 0.5 percent growth in the second quarter, the Office for National Statistics said in a statement.

The third-quarter figure, in line with market expectations, was the fastest quarterly growth rate since the first three months of 2024, the ONS said.

It said the latest growth was driven by strength of the services sector, particularly computer programming, which has helped lift economic output throughout the year.

"Many of the businesses reporting the largest increases in turnover are involved in activities related to artificial intelligence and cloud computing," the ONS said.

GDP grew 0.4 percent in July before stalling in August, then returning to a 0.2 percent expansion in September.

"Growth was unusually concentrated in AI-related sectors," said Ruth Gregory, deputy chief UK economist at Capital Economics.

"The latest monthly data suggests the economy is entering into Q4 with more momentum than we expected," she said.

The Bank of England last week lifted its economic growth forecast for this year and next, citing strength in business investment linked to AI-related demand.

The central bank delivered its forecasts as it raised its benchmark interest rate for the first time in more than three years as soaring energy costs push up global inflation.

- 'Resilience' -

Along with Ukraine's strikes on Russian refineries, disruptions to energy supplies owing to the US-Iran war have caused record-high diesel prices around the world.

"The Middle East conflict has hit growth worldwide, yet Britain is showing stand-out resilience," finance minister John Healey said in response to Thursday's figures.

However, the Bank of England expects in its central forecast for UK inflation to peak at 4.9 percent in the second quarter of next year.

In its worst-case scenario, where oil prices soar far beyond $100 a barrel, the bank warned that UK inflation risked hitting 6.2 percent in the third quarter of next year from 3.5 percent currently.

Millions of Britons face a jump in energy bills from the start of 2027, even after the Labor government offered some assistance in its annual budget announcement last month.

Oil prices have eased to around $90 a barrel in recent weeks on hopes for diplomatic talks aimed at ending the US-Iran war.

"The economy continues to show resilience but there are fears it will lose momentum just as energy-driven inflation is keeping pressure on interest rates," said Kit Rees, investment strategist at wealth management firm Quilter.


Britain Seeking EU Deal Where Benefits Outweigh Trade-offs, Healey Says

British Finance Minister John Healey (AFP)
British Finance Minister John Healey (AFP)
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Britain Seeking EU Deal Where Benefits Outweigh Trade-offs, Healey Says

British Finance Minister John Healey (AFP)
British Finance Minister John Healey (AFP)

British finance minister John Healey said on Thursday the government would pursue closer cooperation with the ‌European Union ‌at next ‌week's ⁠UK-EU summit in areas ⁠where the benefits to businesses and consumers outweigh the costs.

Asked ⁠by the ‌BBC ‌whether efforts ‌to improve ‌post-Brexit ties risked creating fresh uncertainty, Healey said Britain ‌was seeking agreements on areas including ⁠food ⁠and farming that would reduce red tape, ease costs for businesses and help bring down prices.


Oil Gains after Early Drop as Geopolitical Risks Support Market

Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).
Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).
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Oil Gains after Early Drop as Geopolitical Risks Support Market

Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).
Oil prices are set for a sharp weekly decline amid expectations of a de-escalation in the Iran war following election losses suffered by Trump's party (Reuters).

Oil prices rose on Thursday after recovering from earlier losses, as persistent geopolitical tensions in the Middle East offset pressure from rising regional crude output.

Brent futures advanced 45 cents, or 0.49%, to $93.21 a barrel by 0732 GMT. US West Texas Intermediate crude climbed 27 cents, or 0.31%, to $86.80, Reuters said.

Both contracts fell more than $1 per barrel in early Asian trading.

"We are ‌currently in ‌a 'no war, no peace' situation which is allowing Middle ‌East ⁠oil production to ⁠recover despite the deadlock in US–Iran negotiations," said Ole Hansen, head of commodity strategy at Saxo Bank.

Middle East production that has returned after recent disruptions is pressuring crude prices, though persistent geopolitical risks are likely to cap further downside, Hansen said.

Iranian security chief Mohsen Rezaei said in televised remarks Iran will not allow even a single particle of enriched nuclear material to ⁠leave the country and there will be consequences if ‌the US launches new strikes.

Washington has ‌said nuclear issues must be part of any initial negotiations with Iran aimed at ‌ending the eight-month-old war, while US officials downplayed the need for further ‌military strikes.

The comments from Iran and US officials highlighted the obstacles to a broader agreement that could ease tensions around the Strait of Hormuz, a key route for global oil shipments.

In the waterway, tankers are still ablaze, oil ‌spills are washing ashore, and drones and missiles have hit infrastructure across the region.

Elsewhere, Russian and Ukrainian negotiators ⁠agreed to a major ⁠prisoner exchange after two days of peace talks in Abu Dhabi that ended on Wednesday, although US mediators said differences remained on other major issues, including territory.

Ukrainian President Volodymyr Zelenskiy said Kyiv hoped to achieve concrete results on resolving the war this year.

US crude stocks rose by 9 million barrels in the latest week, market sources said, citing data from the American Petroleum Institute. Official data from the US Energy Information Administration is due on Thursday, delayed a day because of a US national holiday on Wednesday.