Oil Stabilizes at Under $100 as US-Iran Talks in Focus

-- Oil prices stabilized at under $100 a barrel on Friday ahead of US-Iran talks in Pakistan as markets sought clarity on whether this weekend's huddle in Islamabad could lead to a long-term peace deal.

West Texas Intermediate crude traded 0.5% higher at $98.25 a barrel on Friday, while Brent added 0.9% to $96.88.

Earlier in the week, the US and Iran agreed to a two-week ceasefire, pausing a war that had spread across the Middle East and curtailed shipments through the crucial Strait of Hormuz. Oil prices on Wednesday posted their sharpest one-day pullback since 2020 following the ceasefire announcement.

The focus now shifts to Islamabad, where officials from Washington and Tehran are expected to meet on Saturday. The truce, which Pakistan helped broker, appeared to be holding so far, though there's uncertainty around the outcome of these talks.

Fighting between Israel and Iran-backed Hezbollah continued in Lebanon, CNN reported Friday. Iran's parliament speaker, Mohammad Bagher Ghalibaf, said talks will begin only if there is a ceasefire in Lebanon and blocked Iranian assets are released.

RBC Capital Markets pointed out uranium enrichment and the lifting of sanctions against Iran as key sticking points heading into the talks.

"Ahead of the weekend's anticipated Islamabad ceasefire talks, we highlight the enrichment and sanctions relief sticking points that will be key points of contention," RBC Head of Global Commodity Strategy Helima Croft wrote in a note emailed Friday.

Washington's zero enrichment demands doomed previous rounds of talks, while Congress will likely push back on any move to lift sanctions on Iran, Croft said.

As part of the ceasefire, Washington demanded the immediate opening of the Strait of Hormuz, while Tehran said it would allow "safe passage" through the waterway, subject to coordination with Iranian authorities.

"Regardless of the outcome of the talks, unblocking the Strait of Hormuz will prove protracted, as a number of countries and companies will resist coordination of passage and payment with Iran," Croft said.