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US Oil Update: Prices Drop Despite Conflicting Reports on Peace Deal Progress, US Crude Stockpile Draw

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Crude oil benchmarks were down on Friday despite skepticism over a potential US-Iran ceasefire framework from both Iran and US Vice President JD Vance.

Front-month West Texas Intermediate crude futures fell 1.4% to $87.66 per barrel, while Brent futures dropped 1.7% to $92.13/bbl.

Both contracts remained on track for a weekly decline on Friday.

Earlier on Thursday, Axios reported that US and Iranian negotiators had tentatively agreed to a 60-day Memorandum of Understanding to extend the current ceasefire and initiate formal talks on Iran's nuclear program.

However, several media outlets reported on Friday citing a report by Iran's Tasnim News Agency that the text of the potential agreement between US and Iran has not been finalized.

The MOU is currently pending final approval from US President Donald Trump, according to officials involved in the mediation, Axios reported.

Meanwhile, domestic supply dynamics continue to tighten. US commercial crude oil stockpiles fell by 3.3 million barrels to 441.7 million barrels for the week ended May 22, according to the Energy Information Administration's weekly report on Thursday.

Speaking Thursday at the Bernstein Strategic Decisions Conference in New York, Neil Chapman, Senior Vice President of ExxonMobil (XOM), noted that global oil inventories are nearing critically low levels, warning that these draws could spark significant upward pressure on crude prices in the coming weeks.

On the demand side, data from Japan's Ministry of Economy, Trade and Industry underscored the severe impact of recent Middle East supply disruptions.

Japan's crude oil imports plummeted 66% year-on-year to about 850,000 barrels per day in April.

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