Oil prices fall as Iran signals openness to diplomacy

Oil prices fell on Thursday after climbing 4 percent in the previous session, as Iran announced it remains open to diplomacy to end its conflict with the United States.

Brent crude futures dropped 94 cents, or 0.9 percent, to $102.13 a barrel, while West Texas Intermediate futures slipped 59 cents, or 0.7 percent, to $91.56.

A senior Iranian official told Reuters on Wednesday that Iran and the United States remain far apart on how to end the conflict, but diplomatic efforts should continue. This followed a speech by Iran’s president at the United Nations General Assembly, where he said Tehran would never yield to US pressure.

The official added that Tehran is reviewing Washington’s response to its proposals for ending the conflict. The proposals focus on lifting the US maritime blockade on Iranian ports and reopening the Strait of Hormuz.

The official said reopening the Strait of Hormuz and lifting the US-imposed maritime blockade on Iran were discussed during indirect talks held on Tuesday.

Earlier on Wednesday, Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, said the Strait of Hormuz would not be reopened unless Iran’s conditions were met.

The US Secretary of State told reporters on Wednesday that reaching an agreement with Iran would require hard work over time, adding that President Trump also has military options.

Meanwhile, traders are assessing potential restrictions on diesel exports.

Ultra-low sulfur diesel futures fell about five percent in midday trading after Politico reported that President Donald Trump’s administration was preparing plans for a 90-day ban on diesel exports, though the White House denied this.

However, Bloomberg later reported, citing sources, that the Energy Secretary had asked oil industry leaders to prepare for possible US restrictions on diesel exports during late Tuesday phone calls.

The Energy Secretary said earlier on Wednesday that a diesel export ban would not be effective, although Trump said he would support it. Analysts and market observers warned such a move would do little to ease rising energy prices and could worsen the global supply crunch, causing further disruption to economies.

Meanwhile, US crude oil inventories rose by three million barrels to 426.4 million barrels last week, according to the Energy Information Administration. Analysts polled by Reuters had expected a decrease of 641,000 barrels. Fuel inventories declined.