Brent Holds Decline on Diplomatic Hopes

Brent crude futures traded near $95 per barrel on Friday after losing nearly 3% in the previous session, weighed down by hopes that the US and Iran could still find a diplomatic solution to end the war and reopen the Strait of Hormuz. President Donald Trump has reportedly been hesitant to reengage in a full-scale war with Iran despite recent confrontations, and would only consider ending the current truce if Tehran kills American troops. Even so, the international oil benchmark is still up more than 4% for the week, as negotiations between Washington and Tehran have yet to show meaningful progress, while Israel’s ongoing military operations in Lebanon is becoming a key obstacle. Iran-backed Hezbollah rejected a US-mediated ceasefire proposal between Israel and Lebanon, although President Trump said the group had approached the White House to discuss ending the hostilities.

Brent crude futures extended losses to fall more than 3% to $94 per barrel on Thursday, snapping a three-day rally, as hopes for an agreement with Iran to end the conflict increased. The US said that Israel and Lebanon had agreed to a ceasefire, conditional on Hezbollah also halting its attacks. Tehran has made a ceasefire in Lebanon a condition for any peace deal with Washington. Lebanese President Aoun added that the ceasefire would come into force within 24 hours of all concerned parties approving it. Also, President Trump said on Wednesday that progress in negotiations with Iran could be achieved as early as this weekend. However, uncertainty about the end of the war persists and tensions in the region remain elevated. Iran said there had been no recent progress in talks with the US and Israel's Defence Minister said Israel will continue to strike Lebanon. Also, the US and Iran have exchanged strikes in recent days, while the conflict has spilled over into Bahrain and Kuwait.

Brent crude futures fell nearly 1% to below $97 per barrel on Thursday, snapping a three-day rally, as hopes for an agreement with Iran to end the conflict increased modestly. The US said that Israel and Lebanon had agreed to a ceasefire, conditional on Hezbollah also halting its attacks. However, there was no immediate indication that Hezbollah had accepted the terms of the agreement. Also, President Trump said on Wednesday that progress in negotiations with Iran could be achieved as early as this weekend. Despite these diplomatic and political signals, tensions in the region remain elevated. The US and Iran have exchanged strikes in recent days, while the conflict has spilled over into Bahrain and Kuwait. On the supply side, EIA data showed that US crude oil inventories fell for a sixth consecutive week, bringing stockpiles closer to minimum operating levels.