Oil prices moved lower as U.S. President Donald Trump expressed optimism about the prospect of a permanent ceasefire between the United States and Iran. Brent crude retreated toward $98 per barrel, giving up some of its weekly gains, while U.S. West Texas Intermediate (WTI) crude approached $93 per barrel. Trump claimed, without providing evidence, that Tehran had agreed to terms it had long resisted, including opening the Strait of Hormuz. The Islamic Republic of Iran has not publicly confirmed making these concessions.
According to several officials, leaders from some Gulf Arab and European countries indicated that a U.S.-Iran peace agreement is expected to take about six months to finalize, and both sides in the conflict should extend the ceasefire to cover that period.
The crude market has been severely disrupted by the conflict, which is nearing its 50th day. The hostilities have caused an unprecedented supply shock: Iran halted most shipping through the Strait of Hormuz, disrupting one-fifth of global oil flow. Recently, the United States also imposed a maritime blockade.
Priyanka Sachdeva, Senior Market Analyst at Phillip Nova Pte Ltd, stated: "The prevailing market narrative is not one of escalation, but stabilization. The oil market is sending a clear signal: panic drives prices higher, diplomatic efforts push them lower, and uncertainty fuels volatility ahead."
The conflict began in February with U.S. and Israeli strikes on Iran. Throughout the war, Trump has frequently made contradictory statements and shifted positions rapidly regarding the conflict timeline, subsequent threats, and agreement terms, repeatedly confusing investors. He has also reversed course multiple times when markets appeared to disapprove of his policies.
On Thursday, the U.S. President said he did not believe an extension of the two-week ceasefire was necessary to reach a deal, anticipating a resolution "soon," but would opt for an extension if needed. He also mentioned that if an agreement with Iran is reached, he might visit Pakistan, the location of the first round of talks.
Later, in remarks at an event in Nevada, Trump sought to ease voters' concerns that the conflict-driven rise in energy prices was increasing living costs. He described the Iran conflict as "going very well" and said it would end shortly.
After a period of exceptionally volatile trading, oil price movements have moderated. This week, Brent crude traded within a range of about $10 per barrel, far below the historic swing of $38 seen in mid-March. Volatility measures for the benchmark's next-month contract are near their lowest levels since early last month.
Israel and Lebanon have also reached a 10-day ceasefire agreement, a move that may help ease regional tensions. Israel has been fighting Hezbollah in Lebanon, a key ally of Iran, and Iran has listed a Lebanon ceasefire as one of its conditions for pausing hostilities with the U.S. Trump expressed hope that Hezbollah would "behave."
Control of the Strait of Hormuz, which connects the Persian Gulf to global markets, remains contested, and dual blockades by both sides have brought shipping through the strait to a near standstill. Iran plans to continue charging tolls on vessels passing through the strait after the conflict ends.
Rebecca Babin, Senior Energy Trader at CIBC Private Wealth Group, commented: "The market is digesting positive headlines on one hand, but facing the reality on the other—each day the normalization process is delayed means more supply losses and tighter near-term fundamentals. Despite some positive geopolitical developments, they have not yet translated into improved oil flows, and transportation remains significantly constrained."
Fatih Birol, Executive Director of the International Energy Agency, warned that a significant portion of the oil and gas production capacity disrupted by the conflict could take up to two years to restore due to infrastructure damage, and the recovery process will be gradual.