International oil prices fell on Friday as the market focused on US-Iran negotiations and Houthi armed attacks

International oil prices fell on Friday (25th). (French information photo)

[Financial Channel/Comprehensive Report] Market hopes for a possible ceasefire between the United States and Iran have increased, coupled with external discussions that the United States may ban diesel exports. However, at the same time, traders are worried that the Yemeni Houthi armed forces’ increasing attacks on Saudi Arabia may disrupt the supply of this major oil-producing country in the Middle East. International oil prices fell on Friday (25th).

Brent crude oil futures fell $2.28, or 2.1%, to close at $104.32 a barrel.

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U.S. West Texas Intermediate (WTI) crude oil futures in New York fell $2.20, or 2.3%, to close at $92.41 a barrel.

Brent crude oil rose less than 1% this week, while WTI fell about 8%.

"Reuters" reported that the market is currently paying close attention to the progress of the US-Iran negotiations. According to people familiar with the matter, U.S. and Iranian negotiators are exploring possible solutions to end the war in stages in New York, including Iran reopening the Strait of Hormuz and the United States lifting its economic blockade on Iran.

The Strait of Hormuz is an important global energy transportation artery. Preliminary data from ship tracking company Kpler shows that the flow of crude oil through the Strait of Hormuz in the week of September 20 reached 33.7 million barrels, about the same level as the previous week; before the outbreak of the Iran war, about 20% of the world's oil supply was transported through this strait.

However, Iranian officials said that even if the United States accepts the proposal to reopen the Strait of Hormuz, Iran will still not make concessions on its nuclear program, leaving the market with a wait-and-see attitude on whether diplomatic progress can proceed smoothly.

On the other hand, the discussion that the United States may ban diesel exports has also become another important variable in the oil market. The market believes that if the diesel produced by U.S. refiners cannot be exported, they may be forced to reduce crude oil processing capacity, further affecting U.S. crude oil demand.

Against this background, the price difference between Brent crude oil and WTI continued to widen, with the premium of Brent crude oil to WTI rising to the highest level since May for the third consecutive day; U.S. gasoline futures also fell by about 4% on Friday.

Supply risks in Saudi Arabia are also of concern. The Yemeni Houthi armed forces have recently continued to attack the Yemeni government supported by Saudi Arabia and launched multiple attacks into Saudi Arabia, triggering market concerns about the supply stability of the world's largest oil exporter.

The military chiefs of Saudi Arabia, Türkiye and Pakistan will discuss how to assist Saudi Arabia in responding to Houthi armed attacks. The market will continue to pay attention to the situation in the Middle East and whether normal transportation in the Strait of Hormuz can be restored. These factors may affect the trend of international oil prices.

In addition, the war between Russia and Ukraine also affects the energy market. The United States has proposed that the United Arab Emirates host trilateral talks between Russia and Ukraine to discuss possible solutions to end the war. If Russia and Ukraine finally reach an agreement, it may allow Russia to increase energy exports and further change the global crude oil supply pattern.

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