Crude retreats as traders focus on U.S.-Iran negotiations
Oil prices slipped on Friday and remained on track for substantial weekly losses as investors increasingly priced in the possibility of a diplomatic breakthrough between the United States and Iran.
Brent crude fell 1.2% to $92.55 per barrel, while U.S. WTI crude dropped 2.0% to $87.11 per barrel during early trading.
If current levels hold, both benchmarks are expected to record weekly declines of roughly 10%, their steepest losses since the beginning of April.
Draft agreement boosts market confidence
Recent reports suggest that U.S. and Iranian officials have reached a preliminary framework that would extend a ceasefire by 60 days while discussions continue on nuclear issues and regional stability.
The proposal still awaits approval from President Donald Trump, but markets have already begun reacting to the prospect of reduced geopolitical tensions.
Investors view the potential agreement as a step toward restoring more normal shipping conditions through the Strait of Hormuz and reducing the risk of near-term supply disruptions.
Supply risks remain despite improving sentiment
Although diplomatic progress has improved sentiment, shipping traffic through the Strait of Hormuz remains far below pre-conflict levels.
That continued disruption has prevented risk premiums from disappearing entirely from the oil market.
According to ING analysts, “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 added 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.”
Headlines continue to drive sharp market swings
Recent trading has been characterized by elevated volatility as investors react to changing developments surrounding the ceasefire process.
Prices briefly moved higher on Thursday after reports of renewed military activity involving U.S. and Iranian forces, but the rally quickly faded as attention returned to diplomatic efforts.
Inflation and growth concerns remain in focus
Beyond geopolitical developments, markets continue to monitor economic indicators that could influence energy demand.
Recent U.S. inflation data showed stronger-than-expected price growth, reinforcing expectations that the Federal Reserve may delay any shift toward lower interest rates.
At the same time, revised GDP figures pointed to softer economic growth during the first quarter, raising concerns that slower activity could eventually weigh on fuel consumption.
Attention turns to next developments
With oil prices under pressure and market sentiment closely tied to diplomatic headlines, investors are waiting for confirmation on whether the proposed ceasefire extension will move forward.
Until then, crude markets are likely to remain highly sensitive to developments in both the Middle East and the broader global economy.
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