Oil prices saw a notable decrease of over 2 percent on Friday, marking their most significant weekly drop since early April. This decline comes as markets responded to potential diplomatic developments between the United States and Iran, which could lead to an extended ceasefire and ease shipping restrictions through the strategic Strait of Hormuz.
In terms of specific figures, Brent crude futures fell to about $92 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped below $88 per barrel. Both benchmarks reached their lowest points since mid-April, with Brent recording an approximately 11 percent decrease for the week and WTI seeing a reduction of over 9 percent.
The market’s reaction was largely influenced by reports that Washington and Tehran were nearing a tentative agreement to continue a ceasefire, potentially reopening the Strait of Hormuz, a crucial corridor for global energy supplies. According to Iranian media, the proposal is under review in Tehran, although a final decision has yet to be announced. This development has alleviated some concerns about supply disruptions that had previously driven oil prices upward amid regional conflict. Nonetheless, uncertainty lingers as shipping activity through the strait remains below pre-conflict levels.
Analysts have noted that traders are closely monitoring the situation regarding the potential U.S.-Iran deal, with many investors choosing to close bullish positions as prices continue their downward trend. Despite the recent price drop, some forecasts indicate that if disruptions to shipping persist for an extended period, oil prices could remain high.
In related news, Saudi Arabia is anticipated to reduce its official selling prices for crude exports to Asia for the second month in a row. This adjustment reflects weaker demand and diminishing spot market premiums. Demand from key buyers in Asia has stayed muted, despite ongoing supply concerns in the Middle East. Additionally, recent U.S. inventory data revealed declines in crude oil, gasoline, and distillate stockpiles, indicating stronger domestic demand and increased refinery activity.