Oil prices fell in Asian trading on Friday after reports that the United States and Iran were exploring an interim deal to reopen the Strait of Hormuz eased supply concerns, while Houthi attacks on Saudi Arabia kept geopolitical risks elevated.
Sharp swings in crude prices
Brent crude futures for November delivery fell 1.1% to 105.47 dollars a barrel, while West Texas Intermediate futures dropped 1.9% to 92.84 dollars.
The two benchmarks had risen by as much as 5% during Thursday's session before paring their gains as reports emerged of US-Iran talks.
Houthi attacks revive supply risks
Prices rose after Saudi Arabia said it had intercepted six ballistic missiles launched by the Houthis in Yemen toward areas including Taif and Yanbu on the Red Sea, reviving concerns about Saudi oil facilities and export routes, particularly after previous damage to the East-West pipeline affected crude flows to Yanbu.
Yanbu is gaining greater importance amid disruption to shipping through the Strait of Hormuz, as Saudi Arabia works to increase crude flows toward the Red Sea export port, although tanker loading operations have not yet fully resumed.
Hormuz at the heart of negotiations
US and Iranian negotiators in New York are exploring a phased path out of the conflict that would involve Tehran reopening the Strait of Hormuz in exchange for Washington lifting its economic blockade of Iran, while the strait remains a key bargaining chip for both sides.
Only 17 cargo vessels transited the strait during a recent weekend, compared with an average of about 125 vessels a day before the war, while oil shipments continued at lower levels.
US inventories rise
US data showed commercial crude inventories rose by 3 million barrels in the week ended September 18, against expectations for a decline of 641,000 barrels, while gasoline inventories fell by 1.7 million barrels and distillate inventories dropped by 400,000 barrels.
In the diesel market, President Donald Trump's administration is considering ways to increase domestic supplies, while Energy Secretary Chris Wright has been in contact with officials at major refining companies to gauge their views on imposing voluntary restrictions on diesel exports.
