Crude Prices Rise Amid Renewed Geopolitical Concerns
Oil prices moved higher on Friday as investors reassessed the prospects for a lasting peace agreement between the United States and Iran following the cancellation of planned talks in Switzerland and an escalation of Israeli military activity in Lebanon.
By 06:45 GMT, Brent crude futures had advanced 51 cents, or 0.64%, to $80.36 a barrel, while U.S. West Texas Intermediate crude gained $1.28, or 1.7%, to $77.88 a barrel. The front-month July WTI contract is due to expire on Monday. Despite Friday’s rebound, both benchmarks remained on course to record weekly losses of roughly 8%.
The more actively traded August WTI contract climbed 59 cents to $76.44 a barrel.
Cancelled Talks Raise Questions Over Durability of Truce
Market sentiment shifted after Switzerland confirmed that negotiations between U.S. and Iranian officials aimed at formalising a broader Middle East agreement would not proceed on Friday.
The cancellation followed the decision by U.S. Vice President JD Vance to withdraw from the planned discussions, prompting fresh uncertainty about whether the recently announced agreement can evolve into a long-term settlement.
Vandana Hari, founder of Vanda Insights, said: “Prices may have bottomed out and we may see a renewed climb accompanied by plenty of volatility as cracks have already emerged in the memorandum of understanding.”
She added: “This is not the geopolitical backdrop that would give the market any confidence in resuming Hormuz transit.”
Hormuz Reopening Expectations Continue to Influence Markets
On Thursday, both Brent and WTI fell to their lowest levels since early March after several tankers, including three Saudi-flagged vessels carrying around six million barrels of crude oil, successfully passed through the Strait of Hormuz.
The shipments took place shortly after the presidents of the United States and Iran signed an interim agreement intended to end the conflict between the two countries.
Analysts estimate that the agreement could eventually release more than 85 million barrels of oil currently stranded in the Gulf region back into international markets. The deal also envisages the removal of U.S. sanctions on Iranian crude exports, potentially increasing global supply further.
Tim Waterer, chief market analyst at KCM, said: “Traders are still waiting for hard evidence that tanker traffic through the Strait of Hormuz is actually normalising before committing to the next leg lower.”
Middle East Producers Prepare for Export Recovery
Before the conflict, approximately one-fifth of global oil and liquefied natural gas shipments moved through the Strait of Hormuz. Market participants believe trade flows could gradually return to normal if the agreement between Washington and Tehran remains intact.
Regional producers are already taking steps to restore exports.
Kuwait Petroleum Corporation announced on Thursday that it had immediately lifted all force majeure declarations introduced during the conflict. Meanwhile, Iraq’s Oil Minister Basim Mohammed said the country’s oilfields are prepared to resume normal operations and gradually restore production to previous levels.
Lebanon Conflict Remains a Key Risk
Despite progress on the U.S.-Iran front, investors remain cautious as Israel continues military operations against Hezbollah in Lebanon.
The ongoing conflict has raised concerns that broader regional instability could undermine the diplomatic progress achieved so far and complicate efforts to restore confidence in Middle Eastern energy supplies.