Oil prices fell steadily in early trade on Monday as markets weighed the prospects for a ceasefire between the United States and Iran, and continued attacks by Yemen's Houthi rebels on Saudi Arabia fueled supply concerns, Reuters reported.
Brent crude futures fell $1.53, or 1.44 percent, to $105.20 a barrel by 09:00 Bulgarian time. U.S. light crude (WTI) fell $1.97, or 2.08 percent, to $92.64 a barrel.
The decline followed strong gains on Thursday, when both benchmarks rose as much as 5 percent in trading. Brent ended the session up 3.4 percent to its highest close since Sept. 15, while WTI gained 2.7 percent.
It was the first gain for the benchmark after six straight sessions of losses, during which its price fell a total of 13 percent. For the week so far, WTI has lost 6.42 percent, while Brent has gained 2.09 percent.
The difference between the prices of the two benchmarks reached $12.68 a barrel - the largest since May, when it exceeded $13. The main reason for the divergence is concerns that a possible US ban on diesel exports could lead to a surplus in the domestic market. The two grades usually move in the same direction, with US oil trading at a lower price.
“The unusually wide spread between US light crude and Brent also reflects different regional risk profiles,“ said Tim Waterer, chief analyst at “KCM Trade“ (KCM Trade).
According to sources familiar with the talks, US and Iranian officials in New York are discussing a phased plan to end the war. It would include Tehran opening the Strait of Hormuz and Washington lifting the economic blockade on Iran.
About a fifth of the world's oil and gas supplies have been restricted since the war began in late February. This led to a 50 percent price spike in March alone and forced buyers of liquefied natural gas to look for new and more secure sources of supply, Reuters notes.
In an interview with “Fox News“, broadcast on Thursday, Iranian President Masoud Pezeshkian said that it was up to the United States to decide when the war would end.
“America must decide whether it wants to end this or not,“ he said.
Meanwhile, Saudi Arabia has intercepted six ballistic missiles fired by the Iran-backed Houthis in Yemen, the Riyadh-led coalition in the country announced. The statement said attacks on Taif and the Yanbu area on the Red Sea had been averted.
The ongoing attacks are a reminder that key oil facilities remain at risk, Waterer said.
Late yesterday, French President Emmanuel Macron announced that France would send troops, radar systems and defense equipment to the Saudi Red Sea port city of Yanbu to protect a key oil terminal and help supply the world market.
Saudi Arabia is increasing the amount of crude oil transported through the “East-West“ pipeline to the Yanbu export hub. However, oil tanker loading there has not yet resumed, according to industry sources, satellite images and shipping data.