Oil prices saw a significant drop of more than 2% on Friday, marking their steepest weekly decline since early April, as markets responded to news of a potential U.S.-Iran agreement that could prolong a ceasefire and alleviate restrictions on shipping through the crucial Strait of Hormuz. Brent crude futures fell to approximately $92 per barrel, and U.S. West Texas Intermediate (WTI) crude slipped below $88 per barrel. Both benchmarks reached their lowest points since mid-April, with Brent experiencing an 11% decrease for the week and WTI losing over 9%.
The dip in prices comes amid reports suggesting that Washington and Tehran are close to reaching a tentative agreement aimed at extending a ceasefire and reopening the Strait of Hormuz, a vital global energy passage. Iranian media indicated that Tehran is nearing the final stages of reviewing the proposed deal, although it has yet to make a definitive decision. This potential improvement in oil flow through the strait has eased fears over supply disruptions that previously drove sharp price hikes during the ongoing conflict.
Despite the positive sentiment surrounding the U.S.-Iran talks, uncertainty lingers as shipping activity through the waterway remains significantly below levels seen before the conflict began. Analysts note that traders are closely monitoring these developments, with many investors opting to exit bullish positions as prices continue their downward trend. Nonetheless, some forecasts suggest that oil prices might remain 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. This move comes in response to weaker demand and decreasing spot market premiums. Major buyers, particularly in Asia, have shown subdued demand despite ongoing supply concerns in the Middle East.
Meanwhile, recent U.S. inventory data revealed declines in crude oil, gasoline, and distillate stockpiles, indicating stronger domestic demand and increased refinery activity.
