Key Takeaways

• Brutal weekly loss: Both benchmarks set for nearly 8% weekly declines, trading near their lowest levels since early March.
• Geneva talks suspended: VP Vance reportedly halted planned Geneva talks on the U.S.-Iran peace process, raising durability questions.
• Switzerland confirms delay: Officials said the final accord talks would not take place on Friday as originally scheduled.
• Fresh Israeli airstrikes: Israel launched new attacks early Thursday, adding doubts about the peace deal’s stability.
• U.S. blockade lifted: Washington confirmed it lifted its blockade on Iran Thursday as the interim deal took effect.
• Ships moving: Vessels carrying stranded oil began exiting the Strait of Hormuz on Thursday, per reports.
• Risk premium erased: The prospect of renewed exports has unwound much of the premium that drove oil above $120 at the crisis peak.
• Full recovery not immediate: Analysts caution Gulf oil flows won’t normalize quickly even with the deal in place.
• Hawkish Fed adds pressure: A stronger dollar from the Fed’s higher-for-longer rate stance is weighing on oil prices independently of the Iran developments.

Oil turned higher on Friday after recouping early losses, but headed for a steep weekly drop, as investors watched fresh developments on the U.S.-Iran peace agreement, which has eased concerns about disruptions to global crude supplies.

As of 02:05 ET (06:05 GMT), Brent oil futures expiring in August rose 0.8% to $80.45 per barrel, while U.S. West Texas Intermediate crude futures climbed 1.8% to $77.50 per barrel.

Both benchmarks were set to decline nearly 8% this week and are trading near their lowest levels since early March — when the U.S.-Iran conflict had just started.

Geneva Talks Suspended, Raising Durability Questions

U.S. Vice President J.D. Vance reportedly suspended planned Geneva talks related to the U.S.-Iran peace process, raising questions over the durability of the recently announced interim agreement.

Switzerland said that talks on the final accord to end the Middle East conflict would not take place on Friday.

Moreover, Israeli forces launched fresh airstrikes early on Thursday, raising some doubts about the peace deal’s stability.

Blockade Lifted, Ships Begin Moving

Market sentiment has improved significantly since Washington and Tehran signed an interim accord aimed at ending hostilities and restoring commercial navigation through the Strait of Hormuz — the vital waterway that normally carries around one-fifth of global oil shipments.

The agreement has raised expectations that millions of barrels of stranded crude could gradually return to international markets in the coming weeks and months.

The U.S. said it lifted its blockade on Iran on Thursday as the interim deal took effect. Ships carrying stranded oil began making their way out of the waterway on Thursday, according to reports.

The prospect of renewed exports has erased much of the geopolitical risk premium that had driven oil prices above $120 per barrel at the height of the crisis.

Industry analysts have also cautioned that a full recovery in Gulf oil flows will not be immediate.

Hawkish Fed Adds Pressure

Meanwhile, broader macroeconomic factors added pressure to oil markets. A hawkish U.S. Federal Reserve stance, including indications that interest rates could remain elevated for longer, has strengthened the dollar.