Oil prices experienced a significant drop of over 2 percent on Friday, marking their steepest weekly decline since the beginning of April. This downturn is largely attributed to discussions of a potential agreement between the United States and Iran, which aims to extend a ceasefire and alleviate shipping restrictions through the strategic Strait of Hormuz.
Brent crude futures fell to approximately $92 per barrel, while U.S. West Texas Intermediate (WTI) crude decreased to below $88 per barrel. Both benchmarks reached their lowest points since mid-April, with Brent seeing an 11 percent reduction over the week and WTI declining by more than 9 percent.
Market analysts noted that the speculation of a U.S.-Iran understanding, which reportedly seeks to extend a ceasefire and reopen the Strait of Hormuz, has significantly influenced sentiment. Iranian media indicated that Tehran is in the last phase of evaluating the proposed deal, although no final agreement has been announced. The prospect of enhanced oil flow through this pivotal energy corridor has eased fears of supply disruptions that have previously driven sharp price hikes. Nonetheless, uncertainty persists as shipping activity through the strait remains below pre-conflict levels.
Amid these developments, traders are closely monitoring the U.S.-Iran negotiations, leading many investors to liquidate bullish positions as prices continue to fall. Despite the recent price reduction, some forecasts suggest that elevated oil prices could persist if disruptions in shipping endure over a prolonged period.
In other related news, Saudi Arabia is anticipated to reduce its official selling prices for crude exports to Asia for the second straight month due to weakening demand and declining spot market premiums. Demand from major Asian buyers has remained tepid, despite ongoing supply concerns in the Middle East. Concurrently, U.S. inventory data revealed declines in crude oil, gasoline, and distillate stockpiles, highlighting stronger domestic demand and increased refinery activity.