Brent crude for July delivery, which expired Friday, settled at $92.05 per barrel, down $1.66, or 1.8%. U.S. West Texas Intermediate (WTI) crude fell $1.54, or 1.7%, to close at $87.36 per barrel.
The three-month conflict has repeatedly produced expectations of a breakthrough that would reopen the Strait of Hormuz, a critical shipping lane that normally carries roughly one-fifth of global oil and natural gas supplies. While both Washington and Tehran signaled that an agreement may be near, key differences remain over how shipping through the strait would be managed.
According to Iran’s Fars News Agency, the proposed agreement would require Iran to reopen the waterway, though Tehran maintains it would continue regulating traffic under its own framework. Iranian officials have previously suggested that vessels transiting the strait could face fees or other restrictions even after a formal reopening.
Despite continuing restrictions on shipping and ongoing inventory drawdowns, investors focused on reports that the United States and Iran had tentatively agreed to extend a ceasefire and ease maritime restrictions.Negotiators had reached a preliminary understanding, though final approval remained outstanding.
Analysts noted that the market’s attention remains fixed on the possibility of a diplomatic resolution rather than current supply conditions.
“While oil flows through the Strait of Hormuz remain restricted and oil inventories keep falling, the market focus remains on the possibility of a deal between the U.S. and Iran,” UBS analyst Giovanni Staunovo said.
Shipping activity through the strait remains well below pre-war levels, and analysts caution that even if an agreement is finalized, a return to normal energy flows could take months. ING analysts said reopening the waterway would provide immediate relief to global oil markets, but a full recovery in exports remains uncertain.
Signs of the disruption’s economic impact continue to emerge. Japan, which relies heavily on Middle Eastern crude, reported a 66% year-over-year decline in oil imports last month. Meanwhile, U.S. government data showed crude, gasoline, and distillate inventories all fell last week as refinery demand remained strong despite lower exports.
Reflecting expectations for a prolonged normalization process, Commerzbank raised its Brent crude forecast to $90 per barrel by the end of the third quarter and $85 by year-end, assuming shipping through the Strait of Hormuz remains constrained for several more months.