Oil Pares Gains

Crude oil fell below $100 a barrel on Friday after Iranian state media reported plans for talks with Gulf states in Oman, suggesting diplomatic efforts are emerging despite a sharp escalation in tensions over the past week. Top diplomats from the six-member Gulf Cooperation Council are expected to meet their Iranian counterpart on Monday to discuss a possible temporary arrangement for managing shipping through the Strait of Hormuz. Meanwhile, the International Energy Agency sharply lowered its outlook for global oil demand, forecasting a 2.5 million-barrel-a-day contraction in 2026, the largest annual decline since the Covid-19 pandemic, as higher prices and tighter supplies weigh on consumption. The IEA warned demand could weaken further if the conflict persists, while OPEC cut its 2026 demand-growth forecast for a fifth consecutive time. Despite Friday’s decline, oil rose for a second week as Houthi threats to Saudi Arabia continue to raise supply concerns.

Crude oil fell to $100 a barrel on Friday but remained 9% higher for the week as investors weighed diplomatic efforts to ease tensions around the Strait of Hormuz against continued fighting across the Middle East. Gulf foreign ministers are expected to meet their Iranian counterpart in Oman on Monday as part of efforts to secure support for a temporary arrangement to manage shipping through the strategic waterway. Meanwhile, the International Energy Agency sharply downgraded its outlook for oil demand, forecasting a 2.5 million-barrel-a-day contraction in 2026, the largest annual decline since the Covid-19 pandemic as higher fuel prices and tighter supplies weigh on consumption. The IEA said demand could fall further if the Iran conflict persists. OPEC has also reduced its 2026 demand-growth forecast for a fifth consecutive time. However, renewed advances by Iran-backed Houthi militants towards the Bab al-Mandeb Strait have raised fresh concerns over supply disruptions.

Crude oil slid to around $101 per barrel on Friday in a likely technical correction, but was still set to end the week sharply higher as the escalating conflict between the US and Iran fueled concerns over prolonged disruptions to global energy supplies. Top US officials reportedly warned President Donald Trump that the war could continue through the remainder of his term, which ends in January 2029. Meanwhile, Iranian leaders are reportedly determined to continue fighting despite mounting economic costs, viewing the conflict as an existential threat. They also claim that Tehran has managed to rebuild its missile capabilities and could intensify attacks on US and Gulf assets if Washington escalates its own strikes. Fighting has intensified over the past two weeks, with the US targeting Iranian oil tankers while Iran launched missiles at US warships and tankers in the Persian Gulf, as well as American assets in neighboring countries.