Oil prices fell sharply on Friday, posting declines of around 9–11% as signs of easing supply constraints triggered a rapid unwind of the geopolitical risk premium. Brent crude dropped $9.01, or 9.1%, to settle at $90.38 per barrel after falling as low as $86.09 intraday. U.S. West Texas Intermediate (WTI) fell $10.84, or 11.5%, to $83.85, touching a session low of $80.56. Both benchmarks recorded their largest daily declines since early April.
The selloff followed confirmation that commercial vessels would be allowed to transit the Strait of Hormuz during the ceasefire period, alongside indications that Iran would not seek to close the waterway again. Early shipping data showed a pickup in outbound traffic, reinforcing expectations that disrupted supply could begin returning to global markets.
Market sentiment shifted quickly as traders moved away from pricing in severe supply disruptions toward a normalization scenario. The reopening of the strait, even on a controlled basis, is viewed as a key step in restoring flows after weeks of significant outages.
Progress in diplomatic negotiations has further supported the move lower. Reports suggest that both sides are advancing toward a preliminary agreement aimed at ending the conflict, with additional talks expected in the near term.
Despite the sharp decline, some caution remains. The reopening process is still evolving, and logistical constraints—including transit coordination and shipping delays—are likely to slow the pace of normalization. In addition, underlying geopolitical risks persist, particularly if negotiations stall or key issues remain unresolved.
Regional supply dynamics also suggest that tightness may linger in certain markets, especially in Europe, where delivery timelines from the Gulf can extend several weeks.
On the supply side, U.S. drilling activity declined again this week, indicating some restraint from producers despite recent price volatility.
Overall, the market has shifted decisively toward pricing in improving supply conditions, though prices remain sensitive to the durability of the ceasefire and the pace at which global oil flows fully recover.