Oil prices experienced a significant drop of over 2 percent on Friday, marking their most substantial weekly decline since early April. This downturn comes amid reports suggesting a potential deal between the United States and Iran, aimed at extending a ceasefire and easing shipping restrictions through the Strait of Hormuz, a critical global energy conduit.
Brent crude futures fell to approximately $92 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped below $88 per barrel. These figures represent the lowest levels for both benchmarks since mid-April, with Brent seeing an 11 percent decrease over the week and WTI experiencing a reduction of over 9 percent.
The market’s reaction was largely influenced by indications that Washington and Tehran might have reached a preliminary agreement to prolong the ceasefire and reopen the Strait of Hormuz. Iranian media have noted that Tehran is in the final stages of reviewing the proposed deal, though no final decision has been announced. The potential for enhanced oil flows through the strait has alleviated some concerns over supply disruptions that previously led to price surges amid the recent conflict. Despite this, uncertainties persist, as shipping traffic through the strait remains well below pre-conflict levels.
Analysts highlight that traders are closely monitoring developments regarding a possible U.S.-Iran agreement, with many investors opting to close bullish positions as prices continue to decline. Although prices have decreased recently, predictions indicate that they could remain high if shipping disruptions continue over an extended period.
In another development, Saudi Arabia is anticipated to reduce its official selling prices for crude exports to Asia for the second consecutive month. This decision comes in response to weaker demand and diminishing spot market premiums. Demand from key buyers, especially in Asia, has stayed subdued despite persistent supply concerns in the Middle East. Additionally, recent U.S. inventory data revealed a decrease in crude oil, gasoline, and distillate stockpiles, pointing to stronger domestic demand and active refinery operations.