Washington: Oil prices fell on Friday after US President Donald Trump said the United States would not attack Iran before the November 3 midterm elections, easing immediate concerns about further military escalation. However, uncertainty over negotiations and continuing disruptions to oil shipments through the Strait of Hormuz remain major concerns for global energy markets.
Brent crude futures fell by $1.37, or 1.3%, to $102.91 a barrel, while US West Texas Intermediate crude futures declined by $1.09, or 1.2%, to $90.40. The prices were reported at 04:50 GMT on Friday and represent trading during the session rather than final closing prices.
Despite the latest decline, Brent crude was on course for a weekly gain after settling about 4% higher on Thursday. US crude, meanwhile, was set for a slight decline over the week, reflecting the continuing uncertainty surrounding global oil supplies.
On Thursday, Trump said Washington was having productive discussions with Tehran aimed at ending the conflict. He said the United States would not attack Iran before the November 3 midterm congressional elections, following reports that he had been considering military action before the vote.
The announcement eased immediate fears of further escalation, but it did not establish a permanent halt to military action or confirm that a peace agreement had been reached. The future direction of the conflict and the outcome of the diplomatic discussions remain uncertain.
Iran is also considering the latest US response to a proposal concerning the Strait of Hormuz. Iranian Foreign Minister Abbas Araqchi said Tehran was reviewing the response to its proposal, according to Iran's Tasnim news agency. The proposal would allow the vital shipping route to reopen within seven days, although the conditions for an agreement remain unresolved.
The Strait of Hormuz is one of the world's most important energy transport routes. Before the war, shipments passing through the waterway accounted for about one fifth of global oil and fuel flows. Disruptions to shipping through the strait have increased concerns about the availability of crude oil and refined fuels in international markets.
Shipping risks remain serious despite the latest diplomatic signals. Reports earlier this week indicated that attacks, attempted attacks and harassment involving tankers in the area had reached their highest weekly level since the conflict began on February 28. These incidents have raised concerns about the safety of vessels and the ability of energy exporters to maintain reliable deliveries.
The United States has continued to put economic pressure on Iran alongside the diplomatic discussions. On Thursday, the US Treasury Department announced sanctions targeting individuals, networks and 17 vessels linked to the transportation of Iranian crude oil, petroleum products and petrochemicals.
The measures highlight the continued tension between efforts to reach a diplomatic solution and Washington's campaign to restrict Iran's oil export networks.
Meanwhile, the International Energy Agency is accelerating the release of emergency oil stocks under a plan launched in March. The initiative is intended to help ease supply pressures, with diesel supplies receiving particular attention. About 325 million barrels had been released by October 7, while completing the remaining commitments could bring another 100 million barrels to the market.
China, the world's largest oil importer, is also expected to resume refined fuel exports after a temporary pause during its Golden Week holiday. The move could help improve the availability of diesel, gasoline and jet fuel, although its actual effect will depend on the volume and timing of shipments.
Oil production in the Gulf of Mexico has also been affected by Hurricane Isaias. Producers had shut in approximately 1.3 million barrels per day as of Thursday, representing 62.9% of current production in the area. The duration of the disruption will depend on safety inspections and how quickly facilities can resume operations.
The combination of diplomatic developments, shipping risks, sanctions and production disruptions continues to influence oil price movements. While Trump's announcement has eased some immediate concerns, the underlying supply challenges have not been resolved.
The direction of oil prices in the coming days will depend partly on whether Washington and Tehran make concrete progress in their discussions and whether shipping through the Strait of Hormuz becomes safer and more reliable. Until there is clearer evidence of progress on both fronts, global energy markets are likely to remain sensitive to developments in the conflict.