Oil prices edged lower on Friday as traders weighed hopes of a possible US-Iran truce against fresh security risks in Saudi Arabia after a week of sharp price swings.
Brent crude futures fell 87 cents, or 0.82 percent, to $105.73 a barrel at 0212 GMT. US West Texas Intermediate (WTI) crude dropped $1.56, or 1.65 percent, to $93.05 a barrel.
The slight decline followed a volatile week for oil markets. Both benchmarks rose as much as 5 percent on Thursday, with Brent settling 3.4 percent higher and WTI gaining 2.7 percent.
Brent recorded its highest closing price since September 15. WTI also posted its first daily gain after falling about 13 percent over the previous six sessions. It is down 6.42 percent for the week, while Brent remains 2.09 percent higher.
The gap between the two benchmarks has also widened to about $12.68, its largest since May.
Analysts said concerns over a possible US ban on diesel exports are partly behind the unusually wide spread. Such a move could increase diesel supplies in the US domestic market and put further pressure on WTI.
“The unusually wide WTI-Brent spread also reflects the different regional risk profiles at play,” said Tim Waterer, chief analyst at KCM Trade.
Markets are also watching US-Iran talks in New York. Sources familiar with the discussions said both sides are exploring a phased route out of the conflict that could involve Iran reopening the Strait of Hormuz and Washington easing economic restrictions on Tehran.
The conflict has disrupted around a fifth of global oil and gas shipments since it began in late February, pushing energy prices higher and forcing LNG buyers to look for supplies from other regions.
However, tensions remain. Saudi Arabia said it intercepted six ballistic missiles launched by Yemen’s Houthis towards areas including Taif and Yanbu.
Saudi Arabia is also increasing crude pumping through its East-West Pipeline to Yanbu, although tanker loadings have yet to resume.
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