US, Iran explore Hormuz strait deal as oil prices retreat from recent gains

Oil prices declined on Friday as reports emerged that the United States and Iran are exploring a deal to reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade of Tehran. Brent crude fell 1.6 percent to $104.88 a barrel, while West Texas Intermediate dropped 2.1 percent to $92.67, retreating from the previous session when both benchmarks had climbed as much as 5 percent. The negotiations, reported by unnamed media sources, are taking place in New York between American and Iranian negotiators who are discussing what has been described as a phased path out of the conflict. The Strait of Hormuz, through which roughly one-third of global seaborne petroleum passes, has been a flashpoint since Iran escalated threats against shipping in the waterway earlier this year. Reuters reported that only 17 commodity vessels crossed the strait over a recent weekend, down sharply from a pre-war average of approximately 125 vessels per day, though oil shipments continued at reduced levels. The price decline also reflected bearish inventory data from the United States. Commercial crude stocks rose by 3 million barrels in the week ended September 18, defying market expectations of a 641,000-barrel draw. Gasoline inventories fell by 1.7 million barrels and distillate stocks declined by 400,000 barrels. At the same time, supply concerns on the other side of the Arabian Peninsula intensified. Saudi Arabia intercepted six ballistic missiles fired by Yemen's Iran-backed Houthis, targeting Taif and the Yanbu region on the Red Sea. Earlier damage to Saudi Arabia's east-west pipeline had disrupted crude shipments to Yanbu, a major Red Sea export hub, and tanker loadings from the port have not fully resumed. Analysts at BMO Capital Markets said Saudi crude supply concerns are re-emerging as the restart of the east-west pipeline has yet to translate into a resumption of Red Sea exports. In Washington, the Trump administration is considering measures to boost domestic diesel supplies after prices climbed to record levels. Energy Secretary Chris Wright has contacted executives at major refiners about a voluntary restriction on diesel exports, following reports of a possible 90-day export ban that the White House denied.