Oil prices saw a slight decline on Friday as reports emerged of a potential ceasefire agreement between the U.S. and Iran, which could lead to the reopening of the Strait of Hormuz.
Brent crude futures for July, set to expire at Friday's settlement, fell by 35 cents, or 0.37%, to $93.36 a barrel at 0105 GMT, while U.S. oil futures dropped 63 cents, or 0.71%, to $88.27 a barrel.
The more actively traded August Brent futures decreased by 46 cents, or 0.50%, to $92.24. Prices have been volatile, dropping over 8% for the week, with Brent hitting a low of $87.11 compared to last week's high of $109.47.
“I can't guarantee that we're going to get there, but right now I feel pretty good about it.”
JD Vance, U.S. Vice President
The fluctuations are driven by conflicting signals regarding the potential end to the three-month Iran war and the reopening of the Strait of Hormuz, a critical transit route for global oil and liquefied natural gas supplies. Traffic through the strait remains limited compared to pre-war levels.
Sources informed Reuters that the U.S. and Iran reached an agreement on Thursday to extend their ceasefire and lift shipping restrictions through the strait, although U.S. President Donald Trump has yet to approve it, and Iranian state media reported it was not finalized.
Background
The potential reopening of the Strait of Hormuz is significant as it handles roughly a fifth of the world's oil and liquefied natural gas supplies. Any resolution could stabilize oil prices and impact global energy markets.
Looking ahead, market participants will closely monitor developments in the U.S.-Iran negotiations and any official announcements regarding the ceasefire and the status of the Strait of Hormuz.
