Oil Price Today (September 25): Crude oil slips to $105 as truce hopes clash with Middle East attacks. What’s next?

Oil prices slipped over a percent on Friday as markets balanced hopes of a possible US-Iran truce against fresh security risks in the Middle East after a Houthi missile attack on Saudi Arabia revived fears of supply disruptions.

US and Iranian negotiators in New York are discussing a phased route out of the war that would see Tehran reopen the Strait of Hormuz and Washington lift its economic blockade of Iran, according to multiple reports.

Crude oil price on September 25

Brent crude fell 96 cents, or 0.9%, to $105 a barrel, while West Texas Intermediate (WTI) declined $1.5, or 1.60%, to $93 a barrel. The muted start to Friday’s session came after a volatile week for crude markets. Oil prices climbed to a one-week high on Thursday, with both Brent and WTI rising as much as 5%. Brent settled 3.4% higher, while WTI gained 2.7%.


Since the war began at the end of February, around a fifth of global oil and gas shipments have been curtailed. That disruption pushed oil prices up 50% in March alone and has also prompted liquefied natural gas buyers to seek new and more stable sources of supply.

Also read: Iran's says it is up to US to choose if it wants to end Iran war; Tehran denies seeking nuclear weaponss

Iranian President Masoud Pezeshkian said on Thursday that the decision over when the war ends rests with the United States. "It's America that must choose whether it wants to end this or not," Pezeshkian said in an interview aired on Fox News.

At the same time, security risks remain. Saudi Arabia intercepted six ballistic missiles launched by Yemen's Iran-backed Houthis, preventing attacks targeting the southern province of Taif and the Yanbu area on the Red Sea, according to the Saudi-led coalition in Yemen.

Where are prices headed?

The uncertainty has also made the oil market harder to assess for major banks. JPMorgan said it had lost visibility on the direction of oil prices and, for the first time since the Iran war began in February, no longer had a clear baseline scenario for the market. The bank said escalating tensions were adding to concerns over an already worsening supply shock.

"We simply don't know how to model the endgame," JPMorgan analysts said, pointing to the uncertainty over how the conflict could evolve. When the conflict began, the bank had assumed there were economic thresholds that the US administration would not cross. Six months into the war, JPMorgan said, many of those thresholds have been crossed, while there remains no clear exit strategy.

The prospect of further supply disruptions has also raised the potential for higher oil prices. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks showed that disruptions to shipping could spread and become more severe.

Goldman Sachs has outlined a scenario in which oil prices could reach as much as $120 a barrel if attacks on vessels in the Middle East intensify. If exports return to normal, the bank expects oil prices to move back towards $80 a barrel.

Read more: US, Iran explore phased deal to reopen Hormuz, lift economic blockade: Report

Struyven told Bloomberg that shipping risks had become a key driver of oil prices. Goldman Sachs sees "meaningful upside to crude oil prices" and also expects natural gas and refined product prices to rise. Struyven added that supply shocks in gas and fuels are larger than those in the crude market.

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