Brent crude settled down $1.21, or 1.2%, at $100.06 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped 27 cents, or 0.3%, to $94.81. Both benchmarks had fallen by as much as $5 earlier in the session before recovering some losses in late trading following reports of explosion-like sounds near Bandar Abbas, Iran.
The primary driver behind the pullback was growing optimism that Washington and Tehran are moving closer to a limited, temporary framework agreement aimed at halting hostilities. Reports indicated the negotiations are centered around a short-term memorandum of understanding rather than a broader long-term peace accord, reducing fears of an immediate escalation in supply disruptions.
Additional pressure came from reports that the United States may restart naval escort operations through the Strait of Hormuz as early as this week under “Project Freedom.” Saudi Arabia and Kuwait have reportedly lifted restrictions on U.S. military access to regional airspace and bases, potentially improving maritime security conditions around the critical shipping corridor.
Despite the softer price action, supply risks remain elevated. Analysts noted that even if a ceasefire framework is finalized, physical crude markets are likely to remain tight for weeks or months due to ongoing shipping disruptions and reduced regional production. Iran has reportedly already reduced output by roughly 400,000 barrels per day as storage capacity fills, with further declines possible.
The Strait of Hormuz remains the central focus for energy markets. Any sustained reopening would likely reduce the geopolitical risk premium currently embedded in crude prices, while a collapse in negotiations could quickly send prices sharply higher again.