Oil prices declined on Friday following reports that Iran had sent a fresh proposal for negotiations with the United States. However, prices remained on track for weekly gains as Tehran continues to block the Strait of Hormuz and the US Navy maintains a blockade on Iranian crude exports.
Price Movements
Brent crude futures for July delivery fell by 26 cents, or 0.2 percent, to settle at $110.14 per barrel by 4:16 p.m. Saudi time. Meanwhile, West Texas Intermediate (WTI) futures dropped $1.83, or 1.7 percent, to $103.24 per barrel.
Weekly Performance
Despite the daily decline, the Brent benchmark was poised for a 4.2 percent gain over the week, while WTI was on track to finish the week up by 9.2 percent. On Thursday, Brent's June contract hit $126.41 per barrel, the highest level since March 2022, before reversing course and ending the session lower.
Iran's Proposal
Iran sent its latest proposal for negotiations with the United States to Pakistani mediators on Thursday, as reported by the state news agency IRNA on Friday. This development triggered a slight pullback in oil prices, though market participants remain cautious.
Market Volatility
Ole Hansen, head of commodity strategy at Saxo Bank, commented: "Thursday's sharp reversal underscores a market that is taking the stairs up but risks the elevator down on any sudden easing headline, making conditions exceptionally challenging for traders."
Geopolitical Context
Oil prices have been on the rise since the US and Israel attacked Iran at the end of February, leading to the closure of the Strait of Hormuz and disrupting shipments of approximately one-fifth of the world's oil and liquefied natural gas supply. A ceasefire has been in place since April 8.
Regional Tensions
A senior UAE official stated on Friday that Tehran could not be trusted regarding any unilateral arrangements it makes for the Strait of Hormuz, highlighting deep mistrust among all parties involved. Additionally, a senior official of Iran's Revolutionary Guards threatened on Thursday "long and painful strikes" on US positions if Washington renews attacks on Iran, pushing oil prices to intraday peaks before they retreated.
US Military Plans
US President Donald Trump was scheduled to receive a briefing on Thursday on plans for a series of fresh military strikes on Iran to compel it to negotiate an end to the conflict, a US official told Reuters.
