Oil prices edged lower on Friday amid hopes that the U.S. and Iran could reach an agreement to extend their ceasefire. Comments from U.S. Vice President JD Vance, suggesting the two sides were "close" but "not there yet," capped the decline.
Crude oil price on May 29
Brent crude futures for July, which expire on Friday’s settlement, slipped 35 cents, or 0.37%, to $93.36 a barrel. U.S. crude futures declined 63 cents, or 0.71%, to $88.27 a barrel. The August Brent contract was down 46 cents, or 0.50%, at $92.24.
Despite the decline, oil prices have been highly volatile in recent sessions. Brent is down more than 8% for the week after touching a low of $87.11, compared with last week’s high of $109.47. Markets have swung sharply on mixed signals surrounding a possible end to the three-month.
On Thursday, geopolitical tensions also intensified after fresh U.S. strikes targeted an Iranian military site overnight, even as diplomatic talks between Washington and Tehran continued.
Iran’s Revolutionary Guards later said they struck a U.S. airbase, according to the semi-official Tasnim news agency, although the base's location was not disclosed.
Reuters reported that the U.S. and Iran agreed on Thursday to extend their ceasefire and remove restrictions on shipping through the strait. However, U.S. President Donald Trump has yet to approve the agreement, while Iranian state media reported that the deal had not been finalized.
Speaking to reporters, Vice President JD Vance said Washington and Tehran were still working through a few unresolved issues, including Iran’s enriched uranium stockpile and enrichment-related concerns.
"I can't guarantee that we're going to get there, but right now I feel pretty good about it," Vance said, adding that the U.S. remained capable of significantly setting back Tehran’s nuclear programme.
Analysts said that even if a ceasefire agreement is reached, normal shipping operations through the Strait of Hormuz may take months to recover, while damaged energy infrastructure could take even longer to fully return to normal.
Earlier this month, Saudi Aramco CEO Amin Nasser warned that disruptions in the Strait of Hormuz could delay stability in global oil markets until 2027, with nearly 100 million barrels of oil supply per week potentially affected. Saudi Aramco is the world’s largest oil producer.
Morgan Stanley described the current oil market as being in “a race against time”, noting that the factors preventing a sharper rise in crude prices may weaken if the Strait of Hormuz remains shut through June.
The brokerage said increased U.S. crude exports and weaker Chinese demand had so far helped offset part of the supply shock. However, it warned that a prolonged closure of Hormuz could tighten global supplies once again if disruptions continue beyond what the U.S. and China are able to absorb comfortably.
