Oil futures experienced a decline of over 2% on Friday, marking their largest weekly drop since early April as traders anticipated a ceasefire agreement involving the U.S., Israel, and Iran. Brent crude futures for July settled at $92.05 a barrel, down 1.8%, while WTI U.S. oil futures closed at $87.36, down 1.7%. John Kilduff from Again Capital noted that the market seemed overly optimistic about the ceasefire, despite ongoing tensions.
The conflict between the U.S. and Iran has raised concerns about the Strait of Hormuz, a vital passage for a significant portion of the world’s oil supply. While both sides hinted at a potential agreement, their interpretations differed. Iran’s Fars news agency reported that the deal would allow Iran to regulate traffic through the strait, potentially charging fees for transit.
Recent volatility in energy prices has been driven by conflicting signals regarding the reopening of the strait. Analysts suggest that while a deal could ease market pressures, uncertainty remains. The U.S. and Iran reached a tentative agreement on a ceasefire and lifting shipping restrictions, but actual traffic through the strait remains significantly lower than pre-conflict levels.
