Oil prices fell on Friday as Middle East supply concerns eased after US President Donald Trump said the country would not attack Iran before US elections next month, amid productive talks to end their war that has disrupted global energy markets.
Brent crude futures dropped $1.68, or 1.61%, to $102.6 a barrel by 0819 GMT. US West Texas Intermediate (WTI) crude futures fell $1.31, or 1.43%, to $90.18, Reuters reported.
On a weekly basis, Brent prices are set to rise after settling 4% higher on Thursday, while WTI is set for a slight decline.
The US President’s pledge not to renew military attacks on Iran before the midterm elections along with China’s resumption of product exports were moving prices lower, PVM Oil Associates analyst Tamas Varga said.
Yet, the escalation of atrocities in the Arabian Gulf and around the Red Sea “has dashed hopes that swelling oil exports from the region will be sustainable and, as such, a protracted fall in oil prices in the foreseeable future seems implausible."
On Thursday, Trump said Washington was having "productive discussions" with Iran and said no attack was planned before the November 3 midterm congressional elections after media reports that he was considering an attack before then.
Iran's Tasnim news agency reported the same day that Foreign Minister Abbas Araqchi said Tehran is reviewing the US response to its proposal that would reopen the Strait of Hormuz within seven days.
"The prospect of easing tensions still needs to be reinforced by concrete progress in negotiations and improvements in shipping safety through the Strait of Hormuz," said XS.com analyst Linh Tran.
The US is still pressuring Iran economically to try to end the war, now in its eighth month, imposing sanctions on Thursday targeting individuals, networks and 17 vessels for transporting Iranian crude, oil products and petrochemicals.
Prices have been volatile this week as threats to shipping in the Gulf and the Strait of Hormuz, which carried shipments equal to about 20% of global oil and fuel before the war, have increased in October.
The Middle East war and the conflict between Russia and Ukraine have disrupted supplies of refined fuels such as gasoline, jet fuel and especially diesel fuel.
The oil market is also contending with Hurricane Isaias in the Gulf of Mexico. Because of the storm, producers there have shut in about 1.3 million barrels per day, or 62.9%, of current oil production as of Thursday, according to the US Marine Minerals Administration.
"This disruption provides additional support for oil prices, but the duration of its impact will depend on post-storm facility inspections and the pace of operational recovery," Tran said.
