By Farhan Rafid and Anthony Harrup
Oil prices fell Friday as investors assessed prospects for U.S.-Iran diplomacy aimed at reopening the Strait of Hormuz while keeping a measure of caution given continued Houthi threats to Saudi energy infrastructure.
Front-month Brent crude for November delivery fell 2.1% to $104.32 a barrel, and ended the week up 0.4%. West Texas Intermediate crude for November settled down 2.3% at $92.41 a barrel for a 3.8% weekly loss.
The market was cautious ahead of the weekend amid reports that Iran had submitted proposals to the U.S. to reopen of the Strait of Hormuz within seven days, under conditions that include the lifting of the U.S. Navy blockade which has kept Iranian oil shut in.
“What are the chances of that? Slim to none basically,” said Robert Yawger, commodity specialist at Mizuho Securities USA. “We’ve heard this story at least four times before, it never panned out.”
Diplomatic headlines should be treated cautiously until there is a concrete step toward de-escalation, such as an easing of the U.S. blockade or an actual resumption of oil transits, said Homayoun Falakshahi, head of crude analysis at data and analytics firm Kpler.
Fresh efforts to revive negotiations are facing hurdles. Saudi Arabia and the United Arab Emirates are urging Washington to maintain economic pressure on Iran and avoid concessions that would ease sanctions or the U.S. naval blockade, The Wall Street Journal reported Friday, citing people familiar with the matter. Mediators including Qatar are pressing for a fresh round of talks in Oman, as soon as next week, aimed at reopening the Strait of Hormuz and beginning to wind down the war, the Journal reported.
Near-term oil-market fundamentals remain tight despite efforts to restore regional supply routes, the National Bank of Kuwait said in an oil-market report Thursday. Brent’s front-month spread remains around $4 to $5 a barrel, significantly above levels of less than $1 in February, reflecting tight prompt supplies, the bank said. Without a near-term agreement to fully reopen the strait, fundamentals are likely to remain tight, NBK said.
The International Energy Agency said global observed oil inventories have fallen by 507 million barrels since the conflict began, equivalent to an average draw of 2.8 million barrels a day. Stocks fell by a further 95 million barrels in August alone, leaving smaller buffers against additional supply disruptions. U.S. commercial crude inventories, however, rose by nearly 3 million barrels in the week ended Sept. 18 to 426.4 million barrels, according to the Energy Information Administration.
The U.S. is likely to see more crude inventory builds, as well as product draws, in coming weeks as refineries go into maintenance, Mizuho’s Yawger said. “If you take a good million barrels off the refinery utilization rate, those million barrels a day are going to get stuffed into storage.”
Attacks by Yemen’s Houthis on Saudi oil facilities keep the oil market wary of selloffs. France plans to send soldiers, radar and defense systems to Saudi Arabia to help protect a refinery and crude-oil pipeline at the Red Sea port of Yanbu, French President Emmanuel Macron said Thursday. France had agreed with Saudi authorities on the deployment, he said, adding that France wasn’t entering the conflict.
Yanbu has become a key outlet for Saudi crude as the kingdom uses its East-West pipeline to bypass disruptions around the Strait of Hormuz. The route through the Red Sea has taken on greater importance as attacks and threats to shipping have complicated the movement of Middle Eastern oil.
Alternative Gulf export routes have already helped offset some of the disruption. Combined oil exports through Saudi Arabia’s Yanbu and the United Arab Emirates’ Fujairah, which is located on the eastern coast of U.A.E. and allows exports to avoid Hormuz, rose to 7.8 million barrels a day in June from 4.1 million before the conflict, before falling to 5.5 million barrels a day in August as attacks disrupted bypass routes, according to the IEA.
The wider energy market also remains exposed to further disruptions. The conflict has reduced crude-oil supplies by an estimated 27%, refined-product supplies by 21% and liquefied natural-gas supplies by 16%, according to S&P Global Energy CERA. War-risk premiums have not disappeared simply on announcements of potential progress, it said in analysis published Thursday.
Write to Farhan Rafid at farhan.rafid@wsj.com and Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
September 25, 2026 16:05 ET (20:05 GMT)
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