Oil futures extended losses on Friday morning following reports of a US-Iran agreement to ease shipping restrictions in the Strait of Hormuz. Brent crude moved lower in early trade; the US benchmark also slipped, setting the pace for sharp weekly declines across both contracts. Sentiment in energy markets turned cautious as traders assessed the potential easing of the Middle East supply risk premium.
Brent for July delivery dropped 1.1%, or $1.04, to $92.67 a barrel at 0330 GMT. US crude futures declined $1.26 or 1.4% to $87.64. Both benchmarks posted steep weekly losses, Brent was down 10.5% across the week, and US crude was off 9.2%, marking the worst performance since April.
Market sentiment shifted after reports of a tentative US-Iran understanding to extend ceasefire terms. Iranian state media confirmed no finalization. The US President Donald Trump had not approved the arrangement at that stage. Traders priced in a lower geopolitical risk premium as expectations grew around easing regional tensions.
The Strait of Hormuz remained central to the supply outlook. Passage of crude oil cargoes stayed far below pre-conflict levels. The waterway handles nearly one-fifth of global oil flows. Analysts from ING noted that any reopening may offer short-term relief to supply chains. Production cuts across upstream fields persisted following earlier disruptions in the region. Refinery recovery in affected areas remains gradual after infrastructure damage.
IG analyst Tony Sycamore stated crude could extend losses toward lower technical support near the lower $80 range if the current narrative persists. Volatility stayed elevated with intraday swings reaching $6 across benchmarks. Traders continue tracking diplomatic signals along with shipping flow data for direction.
Energy markets now balance easing geopolitical fears against uncertain supply restoration timelines. Traders remain focused on upcoming diplomatic updates, shipping data, and inventory trends across major oil-consuming regions.
Also Read: Brent Crude Falls Below $106 as US-Iran Diplomacy Shifts Market Sentiment