Oil prices fell during Asian trading on Friday and are heading toward significant weekly losses amid optimism over a temporary peace deal between the U.S. and Iran, along with the gradual resumption of shipping through the Strait of Hormuz, easing concerns about disruptions to global crude supplies.
As of 03:22, Brent crude futures for August delivery dropped 1.1% to $79.01 per barrel, while West Texas Intermediate (WTI) crude futures declined 0.7% to $76.05 per barrel.
Both benchmark indicators are on track to end the week with a drop of nearly 10%, trading near their lowest levels since early March—when the conflict between the U.S. and Iran first erupted.
Market sentiment has improved significantly after Washington and Tehran signed a temporary agreement aimed at halting hostile actions and restoring commercial shipping through the Strait of Hormuz—a strategically vital waterway that normally handles about one-fifth of the world’s oil supply.
The deal has sparked expectations that millions of barrels of stranded oil could gradually return to international markets in the coming weeks and months.
The U.S. stated that it lifted the blockade on Iran on Thursday, when the temporary agreement took effect. According to available data, vessels carrying stranded oil have begun leaving the strait as of Thursday.
The prospect of resumed exports has offset a substantial portion of the geopolitical risk premium that had driven oil prices above $120 per barrel at the height of the crisis.
Nevertheless, early Thursday morning, Israeli forces launched new airstrikes, raising some doubts about the durability of the peace agreement.
Industry analysts also caution that a full recovery of oil flows from the Persian Gulf will not happen overnight.
Meanwhile, additional pressure on oil markets is coming from macroeconomic factors. The firm stance of the U.S. Federal Reserve, including signals that high interest rates could persist for an extended period, has strengthened the dollar.
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