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EMEA Oil Update: Futures Drop as Investors Track US, Iran Peace Deal Negotiations Closely

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Oil futures declined on Friday following conflicting reports on a potential peace deal framework between US and Iran.

Front-month Murban crude futures fell 1.7% to $92.50 per barrel, while Brent futures dropped 1.5% to $92.27/bbl. Both contracts were headed for their second straight weekly decline.

ING analysts said that the "oil market continues to edge lower amid growing optimism that the US and Iran are moving toward a deal."

Earlier reports suggested US and Iranian negotiators agreed to a memorandum of understanding that would extend the ceasefire for 60 days and allow "unrestricted" passage of commercial vessels through the Strait of Hormuz without paying tolls to Iran.

However, several media outlets reported, citing Iran's Tasnim news agency, that the text of the potential agreement between US and Iran has not been finalized.

ING noted that the deal faces structural hurdles, highlighting that there has been no official confirmation or supporting detail released from the Iranian side.

"Optimism continues to grow after reports that the US and Iran are set to extend a ceasefire, which will include the reopening of the Strait of Hormuz. However, President Trump still needs to sign off on the deal," ING added.

The fragile nature of the peace talks was starkly underscored on the geopolitical front, where active military operations continue to clash with diplomatic headlines.

On the supply side, US crude oil stockpiles fell by 3.3 million barrels to 441.7 mmbbls in the week ended May 22, the Energy Information Administration said in its weekly report on Thursday.

Oil inventories are nearing "unheard of" levels that will lead to increased prices in the next few weeks, Neil Chapman, senior vice president of Exxon Mobil (XOM), said Thursday at the Bernstein Strategic Decisions Conference in New York.

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