West Texas Intermediate (WTI) oil prices extended losses for a third consecutive day, trading around $96.80 per barrel during Asian hours on Friday, as optimism grew over a potential agreement between the United States and Iran, which could ease supply concerns [1]. However, oil prices later resumed their rally, with WTI futures for June advancing 1.5% to $97.81 per barrel and Brent crude gaining 1.9% to $104.52 a barrel, as investors reacted to mixed signals regarding the Iran peace negotiations [2].
US Secretary of State Marco Rubio noted encouraging signs toward a possible deal, mentioning that Pakistani mediators were expected to visit Tehran while Iranian officials reviewed Washington's latest proposal [1]. Senior Iranian officials clarified that no deal had been officially reached, but acknowledged that the gaps between the two nations had narrowed [1]. According to Reuters, Iran's Supreme Leader Mojtaba Khamenei stated that uranium enrichment and Tehran's control over the Strait of Hormuz remain major sticking points [1]. Source [2] further reports that Khamenei issued a directive that near-weapons-grade uranium should not be sent abroad, raising concerns about prolonged conflict and continued oil supply disruptions.
US President Donald Trump stated that negotiations with Iran were in the "final stages" [2]. However, the proposal for a permanent toll system in the Strait of Hormuz, developed by Iran and Oman, faced strong opposition from President Trump, who insisted the waterway must remain open and toll-free [1]. The Iran war, which began in late February, has disrupted traffic through the Strait of Hormuz, a critical passage for about a fifth of global oil and liquefied natural gas prior to the conflict [2].
The International Energy Agency (IEA) warned that as travel demand grows during the summer, oil markets could enter a "red zone" due to depleting global stocks [2]. IEA Executive Director Fatih Birol emphasized that reopening the Strait of Hormuz unconditionally is the most important solution to the energy shock caused by the Iran war, noting that developing Asian and African countries would be most affected by the crisis [2]. Energy executives, according to a note by MUFG, cautioned that full normalization of Middle East oil supply may not occur until 2027 due to the scale of disruptions [2].
Additionally, Reuters cited four sources indicating that seven leading OPEC+ oil-producing countries are likely to agree to a modest hike in July output, with the monthly target expected to be raised by about 188,000 barrels per day, despite ongoing delivery disruptions caused by the war involving Iran [1].
CONCLUSION
Oil markets remain highly volatile as conflicting signals from US-Iran negotiations and ongoing disruptions in the Strait of Hormuz drive uncertainty. While hopes for a peace deal have temporarily eased supply concerns, persistent geopolitical risks and warnings from the IEA suggest that market instability may continue in the near term.