Oil prices settle higher on slow progress in US-Iran peace talks

Oil prices climbed on Friday, as ​investors worried that the US and Iran would be unable to reach a peace agreement that would allow shipping traffic ‌to return to normal in the Strait of Hormuz.

Brent crude futures settled at $103.54 a barrel, up 96 cents, or 0.94 percent. US West Texas Intermediate futures finished at $96.60 a barrel, up 25 cents or 0.26 percent. Both had risen over 3 percent earlier in the session.

On a weekly basis, Brent was 5.48 percent lower and WTI was down by 8.37 percent, with prices volatile as expectations for ​a peace deal between Iran and the US shifted.

"We have so many headlines back and forth, it's hard to keep up," said ​Phil Flynn, senior analyst with Price Futures Group. "The story now is Iran will deliver the uranium for the ⁠lifting of sanctions. But they keep changing the news before the ink is dry on the newspaper."

A diplomatic source in Islamabad told Iran's state ​news agency IRNA that Pakistan's army chief had left for Iran. A senior Iranian source told Reuters earlier that gaps with the US have narrowed, ​and US Secretary of State Marco Rubio spoke of "some good signs" in talks.

"There's been some progress. I wouldn't exaggerate it. I wouldn't diminish it," Rubio told reporters after a NATO ministers' meeting in Sweden. "There's more work to be done," he added. "We're not there yet. I hope we get there."

Rubio said the US was in constant communication with the ​Pakistanis who are facilitating the talks with Iran.

The countries remained divided on Tehran's uranium stockpile and controls on the Strait of Hormuz.

"I think we're very much subject ​to the headlines," said John Kilduff, partner with Again Capital. "We seem headed for a resolution, but the level of clarity is spectacular."

Rubio also said the US ‌had not ⁠requested the assistance of NATO allies in reopening the strait.

Global oil inventories have been depleting at an alarming pace as oil flows via the Strait of Hormuz slow to a trickle, said PVM Oil Associates analyst Tamas Varga.

"The optimism of a relatively imminent truce and bearish rhetoric whenever Brent approaches $110 prevents oil prices from rallying significantly higher," he said.

Separately, a Qatari negotiating team arrived in Tehran on Friday in coordination with the US to help secure a ​deal, a source with knowledge of ​the matter told Reuters on ⁠Friday.

Six weeks into the fragile ceasefire in the US-Israeli war with Iran, elevated oil prices have investors worried about inflation and the outlook for the global economy.

BMI, a unit of Fitch Solutions, has raised its average 2026 dated Brent price forecast to $90 from $81.50 ​to reflect the supply deficit, time required to repair damaged Gulf energy infrastructure, and a six- to ​eight-week post-conflict normalization window.

Around 20 percent of ⁠global energy supplies transited the strait before the war, which has removed 14 million barrels per day of oil - or 14 percent of global supply - from the market, including exports from Saudi Arabia, Iraq, the UAE and Kuwait.

Full oil flows through the strait will not return before the first or second quarter of 2027, ⁠even if ​the conflict ends now, the head of UAE state oil firm ADNOC said.

Seven leading ​Opec+ oil-producing countries will likely agree to a modest hike to July output when they meet on June 7, four sources said, though delivery for several remains disrupted by the war.