Oil prices fell as potential US-Iran talks and a Lebanon-Israel ceasefire raised hopes for an end to the Middle East conflict, though key risks remain.
LONDON: Oil prices fell on Friday as possible further talks between the U.S. and Iran at the weekend and a 10-day ceasefire between Lebanon and Israel raised investor hopes that the war in the Middle East could be nearing an end.
Brent crude futures declined by $1.84, or 1.85%, to $97.55 a barrel at 0914 GMT. U.S. West Texas Intermediate crude futures fell $2.16, or 2.28%, to $92.53 a barrel, trimming gains from the previous session.
At those levels, Brent futures were heading for a 2.5% gain for the week, and WTI futures were on track for a 4.2% drop from last Friday’s close.
Oil prices remain elevated, however, with Brent futures remaining close to $100 per barrel.
The temporary nature of the Israel-Lebanon ceasefire, Israel’s goal of significantly weakening the Iranian regime, and unlikely prospects for the Strait of Hormuz reopening immediately all provided a floor to prices, PVM analyst Tamas Varga said.
Addressing a key sticking point in talks to end the Iran war, Trump said Tehran had offered not to possess nuclear weapons for more than 20 years.
“We’re going to see what happens. But I think we’re very close to making a deal with Iran,” Trump told reporters outside the White House on Thursday.
Israel’s campaign in Lebanon has been a major obstacle to securing a peace deal sought by Trump to end the war he launched with Israel in late February.
U.S. and Iranian negotiators have scaled back their expectations for a comprehensive peace deal and are instead seeking a temporary memorandum to prevent a return to conflict, two Iranian sources told Reuters on Thursday.
Analysts from ING estimate that roughly 13 million barrels per day of oil flow has been disrupted by the closure of the Strait.
