Key Takeaways
- Brent crude slipped toward $98 per barrel while WTI approached $93, marking a weekly decline exceeding 3%
- President Trump unveiled a 10-day Israel-Lebanon truce and stated Iran has accepted critical agreement provisions
- Tehran has yet to publicly verify any compromises, including the reopening of the Strait of Hormuz
- The IEA cautioned that restoring oil and gas output could require as long as two years
- The IEA and OPEC both projected diminished global petroleum demand in upcoming months
Oil prices declined on Friday following diplomatic indications from Washington suggesting a potential resolution to the US-Iran standoff, which is nearing its 50th day.
Brent crude decreased 1.1% to approximately $98.32 per barrel, while West Texas Intermediate declined 1.3% to $89.95. Both benchmarks registered weekly losses surpassing 3%.
The confrontation commenced in February following joint US and Israeli strikes against Iran. Subsequently, Tehran effectively shut down the majority of shipping through the Strait of Hormuz, blocking approximately 20% of worldwide petroleum transport. Washington responded with its own maritime blockade.
President Donald Trump adopted an upbeat stance on Thursday, asserting that Iran had accepted provisions it had previously opposed, notably the reopening of the Strait of Hormuz. Tehran has not publicly validated this claim.
Trump additionally revealed a 10-day cessation of hostilities between Israel and Lebanon. He extended invitations to Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun for White House discussions.
Lebanon’s participation in a ceasefire represented a fundamental requirement Iran had established for more comprehensive negotiations. The agreement appeared to be maintaining stability into early Friday.
“The prevailing narrative has shifted from escalation to stabilization,” remarked Priyanka Sachdeva, senior market analyst at Phillip Nova. “Anxiety fueled the surge, while diplomatic engagement is generating the pullback.”
Comprehensive Agreement May Require Extended Timeline
Several Gulf Arab and European officials suggested a complete US-Iran settlement might necessitate approximately six months. They encouraged both nations to prolong the existing truce throughout that timeframe.
OCBC analysts observed that the US maritime blockade reached its fourth day, maintaining Hormuz traffic at minimal activity levels. Petroleum transit through the waterway continues at a small fraction of pre-conflict volumes.
Trump indicated he did not anticipate needing to prolong the ceasefire to achieve an agreement, forecasting a resolution “fairly soon.” He also mentioned the possibility of traveling to Pakistan, which facilitated initial negotiations, should an accord be finalized.
Following weeks of dramatic volatility, price fluctuations have moderated. Brent operated within approximately a $10 per barrel range this week, contrasting sharply with a historic $38 swing recorded in mid-March.
Production Disruption Recovery May Span Years
IEA Executive Director Fatih Birol cautioned that restoring a substantial portion of interrupted oil and gas production might extend up to two years. Any recovery would unfold gradually, he emphasized.
Both the IEA and OPEC highlighted reduced global petroleum demand projections for the coming months, contributing additional bearish pressure on prices.
“Despite some favorable geopolitical developments, we haven’t seen tangible changes in actual flows,” stated Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
The question of Strait of Hormuz control remains unsettled. Iran has indicated intentions to impose transit fees on vessels even following the conflict’s conclusion.
The present US-Iran ceasefire is scheduled to conclude on April 21.
