Oil Drops on Mideast talks

Oil prices fell 2.35% on Friday, with WTI crude trading around $95.5 per barrel as markets focused on shifting geopolitical developments and ongoing negotiations in the Middle East. The move came amid continued uncertainty around US–Iran talks, with traders weighing the potential for de-escalation against lingering risks to regional stability. Concerns over possible disruptions to shipping flows through the Strait of Hormuz continued to support a geopolitical risk premium in oil markets, even as immediate supply disruption fears remained contained. Despite the daily decline, crude oil remains up 10.28% over the period, reflecting sustained sensitivity to geopolitical headlines and supply-side risk conditions.

Oil prices swung between gains and losses on Friday, with WTI crude futures trading near $98 per barrel, though the benchmark remained on track for its largest weekly decline in 9 months. The moves come amid cautious optimism that the war in the Middle East could be nearing an end. US and Iranian delegations are set to meet in Pakistan on Saturday, while Israel has agreed to hold talks with Lebanon’s government, raising hopes for de-escalation. US President Trump said he was “optimistic” about a potential deal, even as he warned Tehran over proposed transit fees in the Strait of Hormuz. Despite this, the Strait of Hormuz remains largely closed, with reports indicating that Iran is considering charging ships for passage. Adding to supply concerns, Saudi Arabia said attacks on its oil facilities have reduced production capacity by around 600,000 barrels per day and cut throughput on the East-West Pipeline by approximately 700,000 bpd. On the week, the US oil benchmark is down about 12%.

WTI crude futures climbed above $98 per barrel on Friday as Israeli strikes on Lebanon and the ongoing closure of the Strait of Hormuz strained diplomatic efforts, but prices were still on track to drop more than 10% for the week after the US and Iran agreed to a two-week ceasefire. Israeli Prime Minister Benjamin Netanyahu maintained that operations in Lebanon fall outside the scope of the US-Iran truce, although Washington has scheduled talks next week with Israel and Lebanon to address broader ceasefire negotiations. Meanwhile, US President Donald Trump warned Iran over imposing transit fees in Hormuz, criticizing its handling of oil flows. The crucial waterway remains largely closed as shipowners wait for clearer guidance on access. Elsewhere, Saudi Arabia said its oil production capacity has been reduced by roughly 600k barrels per day following attacks on energy facilities, while a major pipeline designed to bypass the Strait of Hormuz was also struck.