Oil prices moved lower in early trading on Friday as optimism grew that tensions in the Middle East could ease, following the start of a 10-day ceasefire between Lebanon and Israel and comments from U.S. President Donald Trump suggesting Washington and Tehran may hold talks over the weekend.
Brent crude futures dropped 61 cents, or 0.61%, to $98.78 a barrel at 07:07 GMT, while U.S. West Texas Intermediate crude declined 89 cents, or 0.94%, to $93.8 a barrel, giving back some of the gains recorded in the previous session.
In remarks addressing a major obstacle in negotiations to end the Iran conflict—which has kept the Strait of Hormuz closed for seven weeks and disrupted around one-fifth of global oil supply—Trump said Tehran had indicated it would refrain from pursuing nuclear weapons for more than two decades.
“We’re going to see what happens. But I think we’re very close to making a deal with Iran,” Trump told reporters outside the White House on Thursday.
Oil prices surged by about 50% in March during a record rally and have only recently slipped back below $100 per barrel, though they have largely held within the $90 range this week.
Israel’s military campaign in Lebanon has remained a key hurdle to securing a broader peace agreement sought by Trump to end the conflict that began in late February.
According to two Iranian sources cited by Reuters, negotiators from the U.S. and Iran have lowered their expectations for a comprehensive settlement and are instead working toward a temporary agreement aimed at preventing renewed hostilities.
Analysts at ING estimate that approximately 13 million barrels per day of oil flows have been affected by the closure of the Strait of Hormuz.