Oil prices increased slightly on Friday but were still set for a weekly drop as investors assessed the uncertain prospects of a US-Iran peace agreement amid ongoing volatility in global energy markets.
Brent crude futures climbed $1.66, or 1.6%, reaching $104.24 per barrel by 0405 GMT, while US West Texas Intermediate (WTI) crude futures rose $1.11, or 1.2%, to $97.46. Despite these gains, Brent crude has fallen 4.6% over the week, and WTI has dropped 7.6%, reflecting sharp fluctuations in market sentiment as hopes for a diplomatic resolution ebb and flow.
A senior Iranian official indicated that differences with the United States have narrowed, and US Secretary of State Marco Rubio noted “some good signs” in the ongoing discussions. Nevertheless, significant disagreements remain, particularly concerning Tehran’s uranium stockpile and control over the Strait of Hormuz.
The oil market remains highly sensitive to developments in the talks, which have seen limited advancement since a fragile ceasefire was established six weeks ago. David Oxley, chief commodities economist at Capital Economics, stated that oil prices are unlikely to decline significantly until market fundamentals improve substantially, a scenario unlikely before 2027. He emphasized that persistent supply constraints and geopolitical risks continue to support high price levels.
Similarly, Satoru Yoshida of Rakuten Securities forecasted that US crude prices would likely stay within the $90 to $110 per barrel range in the near term, consistent with trends since late March.
In a notable update, BMI, a Fitch Solutions unit, raised its average Brent price forecast for 2026 to $90 from $81.50. The revision reflects ongoing supply deficits, damage to Middle East energy infrastructure, and an expected six-to-eight week period for post-conflict normalization. The firm highlighted that uncertainty over energy flows in the region continues to underpin prices despite occasional diplomatic signals.
Before the conflict, approximately 20% of global energy supplies passed through the Strait of Hormuz. The war has effectively removed about 14 million barrels per day—equivalent to 14% of global supply—from the market. Key exporters impacted include Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait.
The head of the UAE’s state oil company ADNOC stated that full oil flows through the Strait are unlikely to resume before the first or second quarter of 2027, even if the conflict ends immediately.
Looking ahead, seven leading OPEC+ producers are expected to discuss a modest output increase for July at their meeting on June 7. However, implementation remains challenging due to ongoing disruptions linked to the Iran conflict.
Overall, the oil market continues to navigate between diplomatic uncertainties and structural supply limitations, maintaining elevated prices despite occasional corrections.
