Oil prices rise amid doubts over US-Iran peace deal

SINGAPORE: Oil prices edged higher on Friday but remained on track for a weekly decline as investors weighed fragile prospects of a breakthrough in US-Iran peace talks, amid continued volatility in global energy markets.

Brent crude futures rose $1.66, or 1.6 per cent, to $104.24 a barrel by 0405 GMT, while US West Texas Intermediate (WTI) crude futures gained $1.11, or 1.2 per cent, to $97.46.

Despite Friday’s gains, Brent is down 4.6 per cent on a weekly basis, while WTI has fallen 7.6 per cent, reflecting sharp swings in sentiment as expectations for a diplomatic deal fluctuate.

A senior Iranian source told Reuters that gaps with the United States had narrowed, while US Secretary of State Marco Rubio said there were “some good signs” in ongoing talks. However, both sides remain divided over Tehran’s uranium stockpile and controls on the Strait of Hormuz.

Oil markets have remained sensitive to developments in the negotiations, which have shown limited progress since a fragile ceasefire took effect six weeks ago.

“Oil prices would only trend lower when oil market fundamentals materially improve, which looks destined to stretch into 2027,” said David Oxley, chief commodities economist at Capital Economics.

He added that underlying supply constraints and geopolitical risks continue to support elevated price levels.

Another analyst, Satoru Yoshida of Rakuten Securities, said US crude is likely to remain in the $90–$110 per barrel range in the near term, as it has largely done since late March.

BMI, a unit of Fitch Solutions, raised its average 2026 Brent price forecast to $90 from $81.50, citing persistent supply deficits, damage to Middle East energy infrastructure, and a six-to-eight week post-conflict normalisation timeline.

The firm said uncertainty over the region’s energy flows continues to underpin prices despite occasional diplomatic signals.

Around 20 per cent of global energy supplies previously transited the Strait of Hormuz before the conflict, with the war effectively removing about 14 million barrels per day of oil — or 14 per cent of global supply — from the market. Major exporters affected include Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.

The head of the UAE’s state oil company ADNOC said full oil flows through the Strait would not return before the first or second quarter of 2027, even if the conflict ends now.

Seven leading OPEC+ producers are expected to consider a modest output increase for July at their meeting on June 7, according to four sources, although implementation remains complicated by ongoing disruptions linked to the Iran war.

The oil market continues to balance between diplomatic uncertainty and structural supply constraints, keeping prices elevated despite periodic corrections.