WTI crude fell 3% Friday as US and Iranian negotiators explored a phased path out of their war, even as Houthi attacks on Saudi Arabia kept traders wary of supply disruption. WTI's discount to Brent has widened to $12 a barrel, a signal markets expect US refiners to process less crude if a possible diesel export ban keeps output stuck at home.
WTI slides as Iran talks advance
West Texas Intermediate crude fell $2.86, or 3.0%, to $91.75 a barrel on Friday. US and Iranian negotiators in New York are exploring a phased path out of the war, one that would have Tehran reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade of Iran, according to sources close to the talks.
The technical picture backs up the move. WTI broke below its 100-hour moving average near $92.17 and a swing-area low near $92.29, putting $88.77 in focus as the next downside target if sellers stay in control.
Despite the diplomatic progress, according to Tim Waterer, chief analyst at KCM Trade: "crude trading moderately softer despite the attacks". Saudi, Turkish and Pakistani military chiefs are set to discuss help for Saudi Arabia as it faces continued strikes from Yemen's Iran-aligned Houthis.
Diesel-ban fears widen the Brent-WTI gap
Even so, WTI is now trading roughly $12 a barrel below Brent. Washington's talk of a possible ban on diesel exports is widening the gap between US crude and the global Brent benchmark, a signal that markets expect US refiners to process less crude if diesel output gets stuck at home. The premium of Brent over WTI rose to its highest since May on Thursday, for a second straight day.
Hormuz flows hold steady for now
Crude flows out of the Strait of Hormuz reached 33.7 million barrels in the week starting September 20, preliminary ship-tracking data from Kpler showed, roughly on track with the prior week. The traffic comprised 19 tankers, 17 of them very large crude carriers, most laden with crude from Saudi Arabia followed by Iraq. Before the war began, about 20% of the world's oil supply moved through the strait.
Sources: Investing.com, Oilprice.com, InvestingLive
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