Oil prices eased on Friday as markets continued to price in the possibility of a diplomatic breakthrough between the United States and Iran, even as geopolitical tensions in the Middle East remain elevated and uncertain.
Brent crude traded around $94.8 per barrel, while WTI hovered near $92.5 per barrel, both extending a sharp decline from the previous session where prices fell by nearly 3%, according to market data. Despite the pullback, crude remains on track for a weekly gain of more than 4%, reflecting continued volatility in the global energy market.
The latest weakness comes as traders react to renewed hopes that Washington and Tehran could still reach a diplomatic understanding that would help ease tensions and potentially reopen key shipping routes, including the Strait of Hormuz. Market sentiment has been particularly sensitive to any signals of de-escalation, given the strategic importance of the region to global oil supply.
Reports also suggest that former US President Donald Trump has shown reluctance to escalate into a full-scale conflict with Iran, despite recent exchanges of hostilities. His position is seen by some analysts as supportive of maintaining room for negotiation, although conditions remain highly fluid, with any escalation still capable of rapidly reversing recent price moves.
At the same time, the conflict environment remains far from resolved. Hezbollah’s rejection of a US-mediated ceasefire proposal between Israel and Lebanon has added another layer of uncertainty, raising questions about whether broader regional stability can be achieved in the near term.
Market participants are also closely watching developments around Iranian engagement signals, with indications that informal channels of communication may still be active despite ongoing military tensions. However, no concrete agreement has emerged, keeping risk premiums embedded in prices.
