Crude prices remain under pressure
Oil prices moved lower on Friday and remained on course for their largest weekly decline in nearly two months as markets continued to assess reports of diplomatic progress between the United States and Iran.
At 05:20 ET (09:20 GMT), Brent crude, the international benchmark, fell 1.2% to $92.55 a barrel, while U.S. West Texas Intermediate (WTI) crude declined 2.0% to $87.11 a barrel.
Both contracts were set to finish the week roughly 10% lower, representing their sharpest weekly declines since early April.
Ceasefire discussions weigh on prices
Market sentiment was influenced by reports indicating that Washington and Tehran had reached a preliminary agreement to extend their ceasefire by 60 days while negotiations continue over Iran’s nuclear activities and broader regional security concerns.
The proposed arrangement has not yet received final approval from U.S. President Donald Trump.
The prospect of an agreement has eased immediate fears of supply disruptions and encouraged expectations that shipping flows through the Strait of Hormuz could gradually recover.
Strait of Hormuz remains a key focus
Despite the improved diplomatic outlook, shipping volumes through the strategically important Strait of Hormuz remain significantly below levels seen before the conflict.
As a result, traders continue to factor a geopolitical risk premium into crude prices.
ING analysts noted in a research report that “The market has increasingly priced in a resolution this week. Therefore, any confirmation of a deal that reopens the strait means that significant further downside is likely limited, particularly during the early stages of a ceasefire.”
They also cautioned that “The market is more vulnerable now than it was pre-war, given the significant inventory drawdowns we have seen over the last 3 months.”
Volatility persists amid conflicting headlines
Oil markets have experienced sharp swings in recent sessions as investors reacted to a steady flow of conflicting developments surrounding ceasefire negotiations.
Crude prices briefly recovered on Thursday following reports of renewed military activity involving U.S. and Iranian forces. However, those gains faded later in the session as optimism over diplomatic progress returned to the market.
Economic concerns add another layer of uncertainty
Beyond geopolitical developments, investors were also evaluating the broader economic environment.
Recent U.S. inflation figures showed that price pressures remain elevated, with personal consumption expenditures data coming in stronger than expected.
The inflation readings reinforced expectations that the Federal Reserve could maintain higher interest rates for an extended period.
Meanwhile, revised economic growth figures suggested that U.S. activity slowed during the first quarter, adding fresh concerns about the outlook for global energy consumption and future oil demand.
Markets await further confirmation
For now, traders remain focused on whether a formal agreement between the U.S. and Iran will be finalized.
While optimism surrounding diplomacy has weighed heavily on oil prices this week, uncertainty remains over both the timing and implementation of any deal, leaving markets sensitive to further geopolitical and economic developments.