Oil prices drop about 3% as US, Iran explore path out of war

Oil prices fell about 3% ‌on Friday, on mounting hopes for a truce between the U.S and Iran, even as traders worried that increasing attacks against Saudi Arabia by Houthi fighters could disrupt supply from the Middle Eastern producer.

Brent futures rose $2.96, or 2.8%, at $103.64 a barrel. West Texas Intermediate crude fell $2.86, or 3.0%, to $91.75. That put Brent down about 1% for the week and WTI down about 9%.

US and Iranian negotiators in New York are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran, sources close to the talks said.

In the Middle East, however, Saudi, Turkish and Pakistani military chiefs are to discuss help for Saudi Arabia as it faces attacks by Yemen’s Iran-aligned Houthis.

“Diplomatic hopes are essentially helping oil prices weather the latest military strikes in the Middle East, with crude trading moderately softer despite the attacks,” said Tim Waterer, chief analyst at KCM Trade.

The Houthis have launched strikes on the Saudi-backed government in Yemen and repeatedly fired into Saudi Arabia, disrupting oil flows from the world’s largest energy exporter, as part of a wider Middle East war that began with US and Israeli strikes on Iran on February 28.

Crude oil flows out of the Strait of Hormuz  reached 33.7 million barrels in the week starting September 20, preliminary ship-tracking data from Kpler showed on Friday, putting exports roughly on track with the previous week’s levels.

The traffic comprised 19 tankers, of which 17 are very large crude carriers (VLCCs) that can carry ‌2 million barrels of oil, the data showed. Most of the tankers are laden with crude from Saudi Arabia, followed by Iraq.

Before the start of the Iran war, about 20% of the world’s oil supplies moved through the strait.

In the US, Washington’s talk of a possible ban on diesel exports is widening the gap between US crude oil futures and the global Brent benchmark, a signal that markets expect US refiners to process less crude oil if their diesel output gets stuck at home.

On Thursday, the premium of Brent crude over WTI rose to its highest since May for a second straight day. Separately, US President Donald Trump made clear during talks with Chinese President Xi Jinping that Chinese help for Iran is unacceptable, US Ambassador to China David Perdue said on Friday.

Any agreement to reduce trade tensions between the US and China could boost economic growth and demand for energy. The US has proposed that the United Arab Emirates host a trilateral meeting with Ukraine and Russia to discuss efforts to end their 4-1/2-year-long war, Ukrainian President Volodymyr Zelenskiy said.

A drone attack damaged the Novoshakhtinsk oil refinery in Russia, forcing it to suspend operations temporarily, Governor Yuri Slyusar said.

Heavy drone strikes on Russian refineries followed discussions at UN  headquarters in New York on a potential energy-related ceasefire between Kyiv and Moscow.

Any deal to end the Russia-Ukraine war could allow Russia to export more energy. Russia, an OPEC+ member, was the world’s third-biggest crude oil producer behind the US and Saudi Arabia in 2025, according to US energy data.

Volkswagen, Audi to recall over two million cars globally

German automaker Volkswagen and its subsidiary Audi are set to recall 900,000 vehicles in Germany and an estimated 2.16 million globally over a potentially faulty screw connection in the steering gear.

According to reports, the Volkswagen models affected by the recall include Tiguan, Touran, Golf Variant and the Caddy and Golf, which were manufactured between September 24, 2013, and July 1, 2024

For Audi, the model under scrutiny is the Q3, with 700,000 of them expected to be brought back to the factory globally, including 58,555 in Germany.

Germany’s Federal Motor Transport Authority (KBA) found that, under certain conditions, corrosion could cause a bolt securing the steering gear to break, and in extreme cases could result in a loss of steering control, increasing the risk of an accident.

KBA’s website currently lists the matter as “under investigation”, meaning a final assessment is still pending. Audi said that the suspected defective Q3 models were produced between 31 October 2017 and 23 May 2024, with a specific combination of steering system and front-axle subframe.

The company noted that any potential repair work would take up to an hour and be free for customers.