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US Oil Update: Crude Settles Lower as Markets Assess US-Iran Peace Deal Progress

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Crude oil futures settled lower in after-hours trading on Friday as markets weighed progress in peace negotiations between the US and Iran to end the three-month conflict, which could pave the way for the reopening of the vital Strait of Hormuz.

Front-month West Texas Intermediate crude futures dropped by 1.28% to $87.76 per barrel, while Brent futures were down 1.84% to $91.99/bbl.

Saxo Bank strategists said oil fell to a five-week low after the US and Iran tentatively agreed to extend their ceasefire by 60 days, with Brent heading for its biggest monthly decline since 2020, as expectations grew that the agreement could pave the way for a gradual reopening of the Strait of Hormuz.

President Trump reportedly ended a meeting in the White House Situation Room without announcing his final decision on whether to approve a deal to pause the ongoing conflict in the Middle East.

Earlier on Friday, Trump said on Truth Social that he would make his "final determination" during that meeting, after outlining conditions for a potential Iran peace deal.

"I will be meeting now, in the Situation Room, to make a final determination," Trump said in a social media post on Truth Social.

The US President said that Washington would lift the retaliatory US naval blockade in the Gulf of Oman, noting that vessels previously affected by the blockade could now return home.

"Ships caught in the Hormuz Strait due to our amazing and unprecedented Naval Blockade, which will now be lifted, may start the process of 'heading home!'," he said.

ING strategists said the oil market is continuing to edge lower amid growing optimism that the US and Iran are moving toward a deal, noting that the reopening of the Strait would offer immediate relief to global energy markets.

Meanwhile, Iran's Speaker of Parliament Mohammad Bagher Ghalibaf said in a social media post that Tehran seizes concessions not through dialogue but with missiles, adding, "in negotiations, we merely make them understand".

"We have no trust in guarantees or words, only actions are the measure," Ghalibaf said in a social media post X. "No action will be taken before the other side acts."

Saxo Bank strategists said that though significant hurdles remain, the market is reacting to the prospect of a supply surge once hundreds of tankers loaded with crude oil and refined fuels are released from the Persian Gulf.

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