Oil prices fall over 1% as US, Iran agree to extend ceasefire

Oil prices fell more than 1% on Friday and were set for their steepest weekly decline since early April after reports that the US and Iran had agreed to extend a ceasefire and ease restrictions on shipping through the Strait of Hormuz, although the deal has yet to be finalized.

Brent crude for July delivery fell 1.1%, or $1.04, to $92.67 a barrel by 03:30 GMT, while US WTI crude dropped 1.4%, or $1.26, to $87.64 a barrel.

Brent was down 10.5% for the week, marking its largest weekly loss since the week ended April 6, while WTI was on track for a 9.2% weekly decline, its biggest since the week ended April 13.

Sources told Reuters on Thursday that Washington and Tehran had reached an agreement to extend the ceasefire and lift navigation restrictions through the Strait of Hormuz. However, US President Donald Trump has not yet approved the deal, and Iranian state media said it has not been finalized.

IG analyst Tony Sycamore said the prevailing market view is that the conflict has effectively ended and that a formal agreement is nearing, adding that crude could continue to retreat toward $80 a barrel if that narrative remains intact.

Oil prices have been volatile in recent sessions amid mixed signals over the end of the three-month Iran war and the reopening of the Strait of Hormuz, a key route that normally carries about one-fifth of global oil and LNG supplies. Traffic through the strait remains well below pre-war levels.

Analysts at ING said reopening the waterway would provide immediate relief to oil markets, but warned that recovery remains uncertain. Production and drilling activity have fallen sharply since the war, with producers curbing output due to storage constraints.

ING expects output to recover gradually rather than immediately, while regional refiners will need time to restore operations after some facilities were damaged during the conflict.