Oil Climbs As Fragile US-Iran Talks Keep Strait Of Hormuz Risks In Focus
Synopsis
Crude oil prices closed higher on Friday as investors weighed slow progress in US-Iran negotiations and continuing disruptions to shipping flows through the Strait of Hormuz.
Oil prices finished higher on Friday as investors remained concerned that negotiations between the United States and Iran were progressing too slowly to restore normal shipping through the Strait of Hormuz, a key artery for global energy supplies. Markets swung sharply throughout the week as traders reacted to shifting headlines around ceasefire talks, sanctions discussions and ongoing disruptions to Gulf oil exports.
Key highlights
- Brent crude settles above $103 a barrel
- Investors remain cautious over slow-moving US-Iran negotiations
- Strait of Hormuz disruptions continue to pressure global supply
- Oil still records weekly losses amid volatile trading
- Qatar joins diplomatic push to help secure agreement
- Analysts warn full Gulf oil flow recovery could take until 2027
Oil Prices End Higher Despite Weekly Losses
Brent crude futures settled at $103.54 a barrel, gaining 96 cents or 0.94%, while US West Texas Intermediate crude closed at $96.60 a barrel, up 25 cents or 0.26%.
Both benchmarks had surged more than 3% earlier in the session before trimming gains later in the day.
Despite Friday’s rise, crude prices still recorded steep weekly declines. Brent fell 5.48% for the week, while WTI dropped 8.37%, reflecting volatile investor sentiment around the diplomatic negotiations.
Market Focus Remains On Iran Talks
Investors continued to track developments surrounding US-Iran negotiations aimed at ending the conflict and reopening stable energy flows through the Strait of Hormuz.
US Secretary of State Marco Rubio said there had been “some progress” in the talks but cautioned that major differences remained unresolved.
Negotiators are still divided over Iran’s uranium stockpile and future controls over the Strait of Hormuz, which handles a substantial share of global oil shipments.
Diplomatic activity intensified on Friday, with a Qatari delegation reportedly arriving in Tehran to support negotiations alongside Pakistani intermediaries already involved in the discussions.
Strait Of Hormuz Disruption Continues To Pressure Supply
Energy markets remain highly sensitive to disruptions in the Strait of Hormuz, where shipping flows have slowed considerably since the conflict escalated earlier this year.
Analysts estimate roughly 14 million barrels per day of oil supply have been removed from global markets, including exports from Saudi Arabia, Iraq, the UAE and Kuwait.
Before the war, around 20% of global energy supplies transited through the strategic waterway.
According to the head of UAE state oil giant ADNOC, full shipping flows may not return before 2027 even if the conflict ends immediately, due to infrastructure damage and ongoing security concerns.
Analysts Warn Of Continued Volatility
Market analysts said crude prices are being heavily driven by rapidly changing geopolitical headlines.
Phil Flynn of Price Futures Group said investors were struggling to keep pace with constantly shifting updates from negotiations.
Meanwhile, PVM Oil Associates analyst Tamas Varga noted that while expectations of an eventual truce are preventing prices from surging dramatically higher, supply shortages remain severe enough to keep markets supported.
BMI, a unit of Fitch Solutions, raised its average 2026 Brent crude forecast to $90 per barrel from $81.50, citing prolonged supply deficits and the lengthy timeline required to normalize Gulf exports.
OPEC+ Production Decision Ahead
Investors are also watching the upcoming OPEC+ meeting scheduled for June 7, where major producers are expected to discuss a modest output increase for July.
However, ongoing disruptions across the Gulf region may limit the effectiveness of any production hike in easing supply tightness.
Oil prices outlook
Markets are likely to remain highly volatile as traders monitor diplomatic negotiations, shipping activity in the Strait of Hormuz and upcoming OPEC+ supply decisions.
Any breakthrough in talks could ease inflation concerns globally, while further delays or renewed escalation may trigger another sharp rally in oil prices.
FAQs
Q1: Why did oil prices rise?
Oil prices rose because investors remain concerned that US-Iran negotiations are progressing too slowly to restore normal oil flows through the Strait of Hormuz.
Q2: What is the Strait of Hormuz?
The Strait of Hormuz is a critical global shipping route through which a large share of the world’s oil exports pass.
Q3: How much oil supply has been affected?
Analysts estimate around 14 million barrels per day of oil supply have been disrupted due to the conflict and shipping restrictions.
Q4: Why are oil prices still down for the week?
Prices remained volatile throughout the week as optimism over possible diplomatic progress alternated with concerns about ongoing supply disruptions.
Q5: What are analysts expecting next?
Analysts expect continued volatility, with markets closely watching peace negotiations, Gulf shipping conditions and the upcoming OPEC+ meeting.
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