Global Oil Prices Fall on Diesel Export Uncertainty and Strait of Hormuz Developments
Global oil prices fell by around 2% in recent trading, pressured by speculation over a possible U.S. ban on diesel exports and diplomatic developments surrounding the Strait of Hormuz.
Oil prices declined by around 2% on Friday as markets responded to hopes of diplomatic progress toward reopening the Strait of Hormuz, alongside discussions over a potential U.S. ban on diesel exports. Traders, however, remained concerned about possible disruptions to Saudi Arabian oil supplies.
Brent crude futures settled $2.28, or 2.1%, lower at $104.32 a barrel. U.S. West Texas Intermediate (WTI) crude fell $2.20, or 2.3%, to $92.41 a barrel.
Brent posted a weekly gain of less than 1%, while WTI fell by around 8% over the week.
The Brent-WTI spread widened to its highest level since May for a third consecutive day, while U.S. gasoline futures fell by around 4% on Friday.
Although the widening spread between U.S. crude and Brent could provide some immediate relief from high diesel prices in the domestic market, analysts say the widening crude futures spread presents a mixed signal. On one hand, it could precede higher gasoline prices, while diesel prices could resume their upward trend over the longer term.
Analysts said that if the United States bans diesel exports, U.S. refineries could cut crude processing volumes by as much as 12%, as storage facilities could potentially reach capacity within a month.
According to Morgan Stanley data, the United States is the world’s largest diesel exporter, with net exports of around 1.2 million barrels per day, compared with domestic production of approximately 5.1 million barrels per day.
Continued Market Concerns Over Crude Oil Supply
Iranian Foreign Minister Abbas Araghchi said during a press conference at the United Nations headquarters in New York that a proposed seven-day plan to reopen the Strait of Hormuz would begin once the United States accepted Iran’s conditions. He said that if Washington accepted the plan the following day, implementation would begin immediately.
Analysts at energy consultancy Ritterbusch & Associates wrote in a note: “The oil market has come under renewed pressure as it continues to assess the possibility of a U.S. diesel export ban, while reports of diplomatic progress toward reopening the Strait of Hormuz have also contributed to Friday’s selling.”
Meanwhile, the response of Yemen’s armed forces to Saudi attacks has disrupted oil flows from the world’s largest energy exporter.
Initial vessel-tracking data from Kpler released on Friday showed that crude oil flows through the Strait of Hormuz reached 33.7 million barrels in the week ending September 20, remaining roughly at the previous week’s level.
Before the start of the U.S. and Israeli military offensive against Iran on February 28, around 20% of global oil supplies passed through the vital waterway.
Russia-Ukraine War Adds to Supply Risks
On the Russia-Ukraine front, Russian President Vladimir Putin said all proposals for resolving the four-and-a-half-year war with Ukraine remained on the table, although Moscow still needed to assess what would be in Russia’s interests.
Yuri Slyusar, the regional governor, said an oil refinery in Russia’s Novoshakhtinsk had been forced to temporarily halt operations following a drone attack.
The latest wave of drone attacks on Russian refineries came after talks at the United Nations headquarters in New York over the possibility of an energy ceasefire between Kyiv and Moscow.
According to Reuters, any agreement to end the Russia-Ukraine war could allow Russia to increase its energy exports. U.S. energy data show that Russia, a member of the OPEC+ alliance, was the world’s third-largest crude oil producer in 2025, behind the United States and Saudi Arabia.