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EMEA Oil Update: Crude Steadies as US-Iran Peace Talks Yield 'Slight Progress'

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EMEA crude futures largely held steady in after-hours trading on Friday as markets weighed the prospect of a breakthrough in US-Iran peace negotiations against the prolonged closure of the Strait of Hormuz.

Brent crude futures rose by 0.85% to $105.68 per barrel, while Murban oil futures were up by 1.25% to $103.43/bbl.

Soojin Kim, research analyst at MUFG, said that although Iran said the latest US proposal had narrowed differences, conflicting signals from officials continued to cloud prospects for a breakthrough and a full reopening of the Strait of Hormuz.

US Secretary of State Marco Rubio told reporters in Sweden, where he is attending a Nato summit, that there had been "slight progress" in the latest round of talks aimed at preventing a wider regional conflict.

However, Rubio said that key deadlocks, specifically regarding Iran's enriched uranium stockpile and Tehran's demands for management authority over the Hormuz, remain unresolved.

"We are doing everything we can to achieve the global consensus necessary to prevent Iran from creating a tolling system, and we're trying to use the United Nations," Rubio told reporters at the Nato summit.

Though Iran said the latest proposal from the US partly bridged the gap between the two sides, comments from Supreme Leader Ayatollah Mojtaba Khamenei about keeping Tehran's uranium stockpile and a dispute over tolls in the Strait clouded the outlook for a breakthrough.

Pakistan's army chief, Asim Munir, is reportedly on his way to Tehran, where he is expected to meet key Iranian figures to discuss Iran-US peace talks and regional peace and stability.

Separately, a Qatari negotiating team arrived in Tehran on Friday in coordination with the US to help secure a deal, according to media reports.

"Markets are still searching for signs of progress in a potential deal between the US and Iran. While there are signs of optimism, uncertainty reigns," ING strategists said on Friday.

Meanwhile, the Middle East conflict, now in its 12th week, has choked traffic via the Strait, keeping global energy markets tight and driving energy prices and inflation higher.

Iran's Islamic Revolution Guards said on Friday that 35 commercial vessels, including oil tankers and container ships, safely transited the Hormuz over the past 24 hours. The US military, on the other hand, said it had redirected 97 Iran-linked commercial vessels and disabled four others since imposing the blockade on April 13.

Kpler strategists said on Friday that mobility through the Strait is improving incrementally, but access remains conditional, politically controlled and exposed to rapid disruption.

On the supply front, the International Energy Agency said on Thursday that global oil markets could soon enter a "red zone" as global stocks deplete and as demand picks up during the summer travel season.

IEA executive director Fatih Birol said the single most important solution to the Iran war energy shock is a full and unconditional reopening of the Strait of Hormuz.

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