Oil Prices Steady as U.S.-Iran Talks Ease Tensions Despite Strait of Hormuz Disruptions

Oil prices remained relatively stable on Friday as optimism over renewed U.S.-Iran negotiations helped calm market fears, even as supply disruptions in the Strait of Hormuz continued to support prices. Brent crude futures rose 0.7% to $105.81 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped 1% to $94.85. Despite the mixed daily performance, both benchmarks are on track for their strongest weekly gains since early March.

Investor sentiment improved after confirmation that U.S. and Iranian officials will meet again for diplomatic talks in Pakistan. The move follows signals from both sides indicating a willingness to pursue a potential agreement. Iran’s Foreign Minister Abbas Araghchi announced a regional tour to coordinate with key partners, while the White House confirmed that senior U.S. representatives would attend the upcoming discussions. Comments from U.S. officials suggesting diplomacy remains a priority briefly pushed oil prices lower during the session.

However, ongoing geopolitical tensions continue to drive the oil market. The prolonged closure of the Strait of Hormuz—a critical global oil shipping route—has significantly reduced supply. According to Goldman Sachs, Gulf oil production has dropped by approximately 14.5 million barrels per day, representing a 57% decline from pre-conflict levels. This supply shock has played a major role in lifting crude prices throughout the week.

Both Brent and WTI have rebounded sharply, gaining over 16% and 12% respectively this week. The rally comes despite a fragile ceasefire and uncertainty around the duration of the conflict. Increased naval activity in the region, including vessel seizures and blockades, has heightened risks to global energy supply chains.

Analysts warn that even if the Strait of Hormuz reopens, oil production may take time to recover fully. Meanwhile, major producers are exploring alternative shipping routes to bypass the disrupted corridor. As geopolitical tensions persist, oil price volatility is expected to remain elevated, keeping investors focused on both diplomatic developments and supply risks.