Oil prices fell about 3% on Friday as diplomatic efforts between the United States and Iran raised hopes for a possible path out of the war.
Brent crude futures fell to around $103.64 a barrel, while West Texas Intermediate (WTI) crude dropped to $91.75.
Brent was down about 1% for the week. WTI was lower by around 9%.
US and Iran Explore Possible Truce
US and Iranian negotiators in New York are reportedly discussing a phased plan to end the conflict.
Sources close to the talks said the proposal could involve Iran reopening the Strait of Hormuz.
The United States could also consider lifting its economic blockade against Iran under the proposed arrangement.
The diplomatic developments have helped ease concerns about further disruption to global oil supplies.
Saudi Arabia Faces Growing Supply Risks
Despite hopes for diplomacy, fresh security risks remain across the Middle East.
Houthi fighters have increased attacks against Saudi Arabia. The attacks have raised concerns about possible disruptions to oil supplies from the world’s largest energy exporter.
Saudi, Turkish and Pakistani military chiefs are expected to discuss support for Saudi Arabia as tensions continue.
Oil flows through the Strait of Hormuz have remained relatively stable.
Kpler data showed around 33.7 million barrels of crude moved through the strait during the week beginning September 20.
Before the Iran war, roughly 20% of global oil supplies passed through the strategic waterway.
Russia-Ukraine War Adds Another Oil Risk
Markets are also watching developments in the Russia-Ukraine war.
The United States has proposed the United Arab Emirates as a venue for talks involving Ukraine and Russia, according to Ukrainian President Volodymyr Zelenskiy.
Meanwhile, a drone attack damaged Russia’s Novoshakhtinsk oil refinery and temporarily halted operations.
Any agreement to end the Russia-Ukraine war could allow Russia to increase energy exports.
Russia was the world’s third-largest crude oil producer in 2025, behind the United States and Saudi Arabia, according to US energy data.
