Oil prices resumed their rally on Friday after three consecutive sessions of declines, as investors reacted to mixed signals from Iran-U.S. peace deal negotiations. Iran’s Supreme Leader Ayatollah Mojtaba Khamenei directed that near-weapons-grade uranium should remain within the country, raising concerns about prolonged supply disruptions. Meanwhile, U.S. President Donald Trump stated that Washington was in the "final stages" of negotiations with Iran, according to a pool report. Brent crude futures gained 1.9% to $104.52 per barrel, while U.S. West Texas Intermediate futures advanced 1.5% to $97.81 per barrel in early Asia trading.
The International Energy Agency (IEA) warned that global oil markets could enter a "red zone" as travel demand grows during the summer season, depleting global stocks. IEA Executive Director Fatih Birol emphasized that the full and unconditional reopening of the Strait of Hormuz is crucial to resolving the energy crisis, particularly for developing Asian and African nations. The conflict, which began in late February, has disrupted traffic through the strait, which previously handled about 20% of global oil and liquefied natural gas.
Analysts from MUFG noted that full normalization of Middle East oil supply may not occur until 2027 due to the scale of disruptions caused by the conflict. Meanwhile, China’s reduced oil imports and increased U.S. exports have helped stabilize prices, despite the ongoing supply disruptions. Physical crude oil prices, which hit all-time highs of over $160 per barrel in March, have since fallen to $100-$110 per barrel, driven by demand destruction and alternative supply sources.
Middle Eastern crude grades like Oman, Dubai, and Murban have seen premiums drop from $65 per barrel in March to around $9 per barrel this week. U.S. crude grades, such as Permian-quality crude and Mars Sour, have also seen premiums decline, aligning with pre-war levels.