On Friday, oil prices saw a notable decline of more than 2 percent, marking the steepest weekly drop since early April. This downturn came as market participants responded to news of a possible deal between the United States and Iran, which could prolong a ceasefire and ease shipping limitations through the Strait of Hormuz.
Brent crude futures experienced a drop to approximately $92 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped below $88 per barrel. Both benchmarks reached their lowest points since mid-April, with Brent decreasing by about 11 percent for the week and WTI falling over 9 percent. The market’s sentiment was influenced by reports of Washington and Tehran nearing a tentative agreement to extend the ceasefire and reopen the Strait of Hormuz, a vital channel for global energy. Iranian media indicated that Tehran was in the final stages of reviewing the proposed deal, although no definitive decision had been made yet.
The potential for increased oil flows through the strait alleviated fears of supply disruptions that had previously driven significant price hikes during the recent conflict. Despite this, uncertainty lingers as shipping activity through the passage remains significantly below pre-conflict levels. Analysts note that traders continue to monitor developments around the potential U.S.-Iran agreement closely, with many investors opting to close bullish positions as prices decline. Nonetheless, some projections suggest that oil prices could stay high if shipping disruptions persist over a longer period.
In addition, Saudi Arabia is anticipated to reduce its official selling prices for crude exports to Asia for the second month in a row, owing to weaker demand and diminishing spot market premiums. Demand from key buyers, especially in Asia, has stayed modest despite ongoing concerns over supply in the Middle East. Meanwhile, recent U.S. inventory data revealed reductions in crude oil, gasoline, and distillate stockpiles, signaling stronger domestic demand and increased refinery operations.