Friday saw a significant drop in oil prices, with declines exceeding 2 percent, marking the steepest weekly fall since early April. This downturn was largely driven by emerging reports of a possible accord between the United States and Iran, which could prolong a ceasefire and alleviate shipping restrictions in the Strait of Hormuz.
The price of Brent crude futures dipped to approximately $92 per barrel, while U.S. West Texas Intermediate (WTI) crude fell to below $88 per barrel. These figures represent the lowest levels for both benchmarks since mid-April, with Brent experiencing an 11 percent decline over the week and WTI dropping over 9 percent.
Speculation regarding a tentative agreement between Washington and Tehran, potentially extending a ceasefire and enabling smoother operations through the vital Strait of Hormuz, has influenced market sentiment. Although Iranian media has indicated that Tehran is nearing the completion of its assessment of the proposed deal, a conclusive decision remains pending.
The prospect of enhanced oil flow through this critical passage has diminished fears of supply disruptions, which had previously triggered substantial price hikes amid the ongoing conflict. Nonetheless, uncertainty lingers, as shipping traffic through the strait is yet to return to its pre-conflict levels.
Analysts note that traders are closely monitoring developments related to the possible U.S.-Iran agreement, with many investors opting to close bullish positions as prices continue to fall. Despite the recent downturn, some forecasts predict that oil prices could remain high should shipping disruptions persist for a longer duration. Concurrently, Saudi Arabia is anticipated to lower its official selling prices for crude exports to Asia for the second month in a row, owing to decreased demand and reduced spot market premiums. Demand from key buyers in Asia has remained lackluster, despite ongoing supply challenges in the Middle East. In the United States, recent inventory data has shown reductions in crude oil, gasoline, and distillate stockpiles, indicating robust domestic demand and heightened refinery activity.