Oil prices snap two-week rally on easing Saudi, Iran fears

Oil prices posted weekly losses on Friday, halting a two-week rally that had driven crude up nearly 20%, as signs of diplomatic progress between the United States and Iran and easing fears over Saudi supply disruptions brought some relief to energy markets. The pullback in crude also lifted gold, which climbed to a one-week high and was set for its first weekly gain in four.

Crude Retreats as Saudi Pipeline Fears Ebb

Brent crude futures fell 1.6% on Friday to settle at $103.19 a barrel, shedding 1.5% for the week, while West Texas Intermediate crude settled at $99.53, its first close below $100 since September 9. WTI lost 0.7% on the week.investing

Crude had spiked earlier in the week after Saudi Arabia was forced to shut its East-West Pipeline, a 750-mile conduit carrying roughly 4 million barrels per day to Red Sea ports, following a drone attack on September 11. The pipeline had become the kingdom's primary export route after the Strait of Hormuz was disrupted by the U.S.-Iran conflict that began in February.reuters+2

But prices retreated after Bloomberg News reported that Saudi Arabia was working to restore about half the pipeline's capacity within days, faster than initial estimates of weeks. Riyadh also began offering crude cargoes to Asian refiners via ship-to-ship transfers off Oman's Sohar port, according to Reuters. Still, Saudi Aramco informed European refining customers they would receive no crude in October, Bloomberg reported, a move that sent European stock indexes lower.bloomberg+1

Diplomatic Signals on Iran

President Trump said this week the U.S. was "hopefully" nearing the end of its nearly seven-month war with Iran, adding that Tehran was "very much wanting to make a deal". The State Department confirmed it had granted visas to top Iranian officials, including the president and foreign minister, to attend next week's United Nations General Assembly in New York. Trump is expected to meet Gulf leaders on the sidelines of the gathering.iheart+2

The U.S. and Iran have held no direct negotiations since an interim agreement reached in June collapsed within weeks, according to Reuters. Tensions remain elevated around the Strait of Hormuz, where Iran's Revolutionary Guard said Friday that a Togo-flagged tanker had been struck attempting passage.reuters+1

Gold Gains as Oil Eases Inflation Worries

Lower crude prices eased some inflation concerns, helping gold rise 0.3% to around $4,352 per ounce on Friday, its highest level since September 11. Chris Gaffney, president of world markets at EverBank, said the easing of oil prices "reduces inflation pressures as oil has been the main driver of overall inflation," adding that traders who had piled into short positions ahead of the Federal Reserve's rate hike on Wednesday were now rapidly unwinding those bets. The Fed raised rates by a quarter point to the 3.75%-4% range, with markets pricing in a 58% chance of another hike in October.economictimes