Oil prices declined in early Friday trading as optimism grew that diplomatic efforts could ease tensions in the Middle East. Sentiment was lifted after a 10-day ceasefire between Lebanon and Israel took effect, while U.S. President Donald Trump said Washington and Tehran could hold talks over the weekend.
Brent crude futures fell 61 cents, or 0.61%, to $98.78 a barrel at 07:07 GMT. U.S. West Texas Intermediate crude dropped 89 cents, or 0.94%, to $93.8 a barrel, giving back some of the previous session’s gains.
Addressing a major hurdle in efforts to end the Iran conflict—which has kept the Strait of Hormuz shut for seven weeks and disrupted roughly one-fifth of global oil supply—Trump said Iran had indicated it would refrain from developing nuclear weapons for more than 20 years.
“We’re going to see what happens. But I think we’re very close to making a deal with Iran,” Trump told reporters outside the White House on Thursday.
Oil had surged around 50% in March during a sharp rally and has only recently slipped back below the $100-per-barrel level, though prices have largely remained within the $90 range this week.
Israel’s military operations in Lebanon continue to pose a key challenge to securing a broader peace agreement that Trump is pursuing to end the conflict launched in late February.
According to two Iranian sources cited by Reuters, U.S. and Iranian officials have tempered expectations for a comprehensive deal and are instead focusing on a temporary arrangement aimed at avoiding renewed hostilities.
Analysts at ING estimate that approximately 13 million barrels per day of oil flows have been impacted by the closure of the Strait of Hormuz.
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