The Saudis, U.S. are planning action against Houthi aggression at Bab el-Mandeb: File Image/Pixabay.

Oil prices on Friday reversed course unexpectedly and fell over 2 percent based solely on a media report that a deal with Iran is in the works to manage shipping through the Strait of Hormuz.

As of 1633 GMT, Brent was down $2.46, or 2.2 percent, at $105.17 per barrel; West Texas Intermediate fell $2.44, or 2.3 percent, to $100 per barrel.

Both benchmarks remained on course for a weekly gain of more than 9 percent.

The Financial Times reported that foreign ministers in the Middle East were working on a temporary deal with Iran to manage shipping through the Hormuz, but as with all things related to the U.S./Iran war, circumstances turn on a dime, and traders are motivated by fear-driven media headlines instead of fundamentals.

UBS energy analyst Giovanni Staunovo said, "Some headlines of possible new talks in the Middle East are weighing moderately on oil prices today…I keep seeing near-term risks to the upside for oil prices, but we should expect ongoing high price volatility too."

Phil Flynn, senior market analyst with Price Futures Group Inc., added, "The question is will the market remain calm over the weekend? That's when things seem to happen.”

That may be an understatement, considering Yemen's Iran-backed Houthis on Friday reached the island of Perim in the Bab el-Mandeb Strait, strengthening its resolve to close one of the world’s most vital shipping choke points.

Saudi crown prince Mohammed bin Salman urged U.S. president Donald Trump to take military action against the Houthis, and the U.S. Central Command has traveled to Saudi Arabia for coordination talks.

The Saudis were also busy assessing the damage and implications of drone strikes at pumping stations along its east-west oil pipeline system, the Kingdom’s critical bypass around the Hormuz; about 5 million barrels per day were being rerouted through the system toward Yanbu on the Red Sea.

Meanwhile, Bloomberg noted that while U.S. consumers were paying 3.4 percent more for gasoline and other costs last month than a year ago, that was close to what economists expected and strengthened expectations that the Federal Reserve will hike its main interest rate next week.

The news agency went on to state that a hike will make it more expensive to borrow money, slow the economy, “and hopefully remove fuel for further inflation.”