Oil prices edge lower as Iran says it is open to diplomacy to end the war

Oil prices dipped on Thursday, after rising 4% the previous day, as Iran expressed willingness to engage in diplomacy to end the ongoing US-Iran conflict, despite the nations remaining far apart on potential solutions. Brent crude futures declined by 94 cents, or 0.9%, to $102.13 a barrel, while West Texas Intermediate futures fell by 59 cents, or 0.7%, to $91.56.

Iranian officials have stressed that dialogue must persist, even though the US and Iran remain at odds over the path to resolving the war. President Iran declared at the UN General Assembly that Tehran would not yield to US pressure. Iran is currently evaluating Washington's reaction to its peace proposals, which emphasize lifting the US naval blockade on Iranian ports and reopening the Strait of Hormuz.

Direct discussions regarding the Strait of Hormuz and the removal of the US naval blockade took place on Tuesday, according to the official. On Wednesday, Iran's top security official, Mohsen Rezaei, reiterated that the Strait of Hormuz would not reopen until Iran's demands are met. US Secretary of State Marco Rubio cautioned that achieving a solution with Iran would necessitate substantial effort over time, hinting that the Trump administration has military alternatives.

Market participants also considered potential restrictions on diesel exports. Ultra-low-sulfur diesel futures experienced a 5% decline in midday trading following reports that the Trump administration was preparing a 90-day diesel ban. However, the White House later denied such plans. Energy Secretary Chris Wright had previously expressed skepticism about the effectiveness of a diesel export ban, even as President Trump expressed support for it.

Analysts and market observers have cautioned that such a move would likely have little impact on alleviating soaring energy prices and could exacerbate global supply constraints, further destabilizing economies. Meanwhile, US crude inventories increased by 3 million barrels to 426.4 million barrels last week, according to the Energy Information Administration. Analysts surveyed by Reuters had anticipated a 641,000-barrel reduction. Fuel stocks fell.