- Oil prices climbed on Friday as investors questioned the chances of a breakthrough in US-Iran peace talks, although Brent and WTI remained on track for weekly losses.
- Disruptions through the Strait of Hormuz continue to tighten global oil supplies, while OPEC+ members are expected to approve a modest increase in July output
Oil prices climbed on Friday as investors questioned the likelihood of a breakthrough in US-Iran peace talks, although both Brent and West Texas Intermediate (WTI) remained on track for weekly losses.
Brent crude futures gained $3.30, or 3.2%, to $105.88 a barrel by 0845 GMT, while US WTI futures rose $2.53, or 2.6%, to $98.88. Despite Friday’s gains, Brent remained more than 3% lower for the week, while WTI fell around 6% as shifting expectations over a potential peace agreement drove sharp price swings.
A senior Iranian source told Reuters that Tehran and Washington had narrowed their differences, while US Secretary of State Marco Rubio pointed to “some good signs” in the negotiations. However, both sides still disagree over Iran’s uranium stockpile and controls over shipping through the Strait of Hormuz.
The uncertainty has kept oil markets highly sensitive to political developments. PVM Oil Associates analyst Tamas Varga said traders were closely watching the negotiations as declining inventories and disruptions through the Strait of Hormuz tightened global supply.
“The optimism of a relatively imminent truce and bearish rhetoric whenever Brent approaches $110 prevents oil prices from rallying significantly higher,” Varga said.
The prolonged conflict has also increased concerns about inflation and global economic growth. Six weeks after the fragile ceasefire began, diplomatic efforts have made little progress, while high oil prices continue to increase pressure on consumers and economies.
BMI, a unit of Fitch Solutions, raised its average 2026 dated Brent price forecast to $90 a barrel from $81.50. The company cited the expected supply deficit, the time required to repair damaged Middle Eastern energy infrastructure and a six-to-eight-week period for oil markets to normalise after the conflict.
The Strait of Hormuz remains a major threat to global energy supplies. Before the conflict, approximately 20% of global energy supplies passed through the strategic waterway. The disruption has removed about 14 million barrels per day of oil, equivalent to roughly 14% of global supply, from the market. The affected exports include supplies from Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.
The disruption could continue well beyond the end of the conflict. The head of the UAE’s state oil company, ADNOC, said full oil flows through the Strait of Hormuz would not resume before the first or second quarter of 2027, even if the conflict ended immediately.
China could also limit the growth of refined fuel exports as it prioritises domestic demand. Three trade sources told Reuters that China could increase June exports only slightly from May levels, reaching about 550,000 metric tons compared with approximately 500,000 tons expected for May.
OPEC+ producers are also preparing to adjust supply. Four sources said seven leading members of the group would likely agree to a modest increase in July production when they meet on June 7. However, the Iran conflict continues to disrupt deliveries from several producers.
The combination of uncertain peace negotiations, restricted oil shipments through the Strait of Hormuz, declining inventories and disrupted production continues to expose the market to significant volatility. Investors now face a balance between the possibility of a ceasefire that could ease supply pressures and the risk that prolonged disruptions will keep crude prices elevated.