Global crude oil prices edged lower on Friday, after Iran submitted a new proposal for diplomatic talks with the United States via Pakistani mediators, but market benchmarks remained on track to lock in strong weekly gains as geopolitical tensions in the strategically critical Strait of Hormuz keep supply risks elevated.
Brent crude futures for July delivery fell 26 cents, or 0.2%, to settle at $110.14 per barrel on Friday. U.S. West Texas Intermediate (WTI) crude futures for the same contract period dropped a sharper 1.7%, or $1.83, to reach $103.24 per barrel. Even with this weekly pullback, Brent is set to notch a 4.2% gain across the full trading week, while WTI is on pace for an even larger 9.2% weekly increase. On Thursday, Brent’s June contract hit an intraday peak of $126.41 per barrel, the highest price recorded since March 2022, before pulling back from the multi-year high.
The new negotiation proposal, confirmed by Iran’s state-run news agency IRNA, was delivered to Pakistani intermediaries on Thursday in an effort to restart stalled diplomatic talks between Tehran and Washington. The breakthrough in diplomatic outreach triggered a small pullback in crude prices, as investors bet reduced geopolitical risk could ease supply disruptions. However, broader market uncertainty has kept prices supported, with the situation in the Strait of Hormuz remaining extremely volatile.
Tensions in the key waterway began escalating after joint U.S.-Israeli strikes on Iran in late February, which prompted Iran to restrict passage through the strait and led the U.S. Navy to block Iranian oil exports. Around 20% of the world’s daily oil and liquefied natural gas supplies pass through the strait, making any disruption a major shock to global energy markets. While a ceasefire has been in place since April 8, the security situation remains precarious, with neither side backing down from their positions.
Senior regional officials have amplified concerns over the stalemate this week. A top United Arab Emirates official publicly stated deep distrust of Iran on Friday, warning that Tehran cannot be trusted to uphold unilateral agreements around free passage through the strait, reflecting widespread mutual suspicion across regional and global powers. Just a day earlier, a senior commander with Iran’s Islamic Revolutionary Guard Corps threatened “long and painful strikes” against U.S. military positions in the region if Washington resumes offensive attacks on Iran, a comment that sent prices spiking higher during Thursday’s trading session before the later pullback.
Adding to market volatility, an unnamed U.S. official confirmed that President Donald Trump received a briefing on Thursday outlining plans for potential new military operations against Iran. The proposed actions are intended to increase pressure on Tehran to speed up diplomatic negotiations and bring the ongoing conflict to a close, according to the official.
Ole Hansen, a senior market analyst at Danish investment bank Saxo Bank, noted that the sharp swing in prices on Thursday highlights the extreme volatility roiling global energy markets right now. “Thursday’s sharp reversal shows a market that is cautiously climbing higher, but can pull back quickly whenever any hint of positive diplomatic news emerges,” Hansen explained. “This has created exceptionally challenging trading conditions for market participants.”