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Oil Slips as Ceasefire Fuels Hopes of Iran Breakthrough, Millions of Barrels Still at Risk

Oil markets are shifting again, and the stakes remain high.

Prices fell early Friday as fresh signs of easing tensions in the Middle East raised hopes that a costly and disruptive conflict could be nearing a turning point. A newly announced ceasefire and the possibility of U.S.-Iran talks are giving traders a reason to step back after weeks of volatility driven by supply fears and geopolitical risk.

Brent crude futures dropped 61 cents, or 0.61%, to $98.78 a barrel at 0707 GMT. U.S. West Texas Intermediate crude fell 89 cents, or 0.94%, to $93.8 a barrel, trimming gains from the previous session while holding within the tense $90 range.

Ceasefire Shifts Market Sentiment

A 10-day ceasefire between Lebanon and Israel has taken effect, easing one of the most dangerous flashpoints in the region. At the same time, Donald Trump said the United States and Iran may meet for talks as soon as this weekend.

Together, these developments are reshaping expectations in a market that has been on edge.

"We're Very Close to a Deal"

Addressing a key sticking point, Trump said Tehran had offered not to possess nuclear weapons for more than 20 years, a potential breakthrough in efforts to end the war that has disrupted global energy flows.

"We're going to see what happens. But I think we're very close to making a deal with Iran,"

he told reporters outside the White House on Thursday.

Supply Crisis Still Unresolved

Despite the more optimistic tone, the global oil supply remains under severe pressure.

The conflict has forced the closure of the Strait of Hormuz for seven weeks, cutting off roughly one-fifth of the world’s oil supply. Analysts at ING estimate that about 13 million barrels per day of oil flow has been disrupted.

This massive supply shock helped drive oil prices up 50% in March in a record surge, pushing crude above $100 per barrel before recent declines.

Fragile Negotiations Behind the Scenes

Efforts to reach a comprehensive peace deal are losing momentum.

U.S. and Iranian negotiators have scaled back their ambitions and are now pursuing a temporary memorandum to prevent a return to conflict, according to two Iranian sources who spoke to Reuters.

Israel’s campaign in Lebanon remains a major obstacle, complicating the broader peace effort Trump has sought since launching the war alongside Israel in late February.

What Comes Next for Oil Markets

Traders now face a volatile mix of hope and uncertainty.

Progress in negotiations could push prices lower, but with millions of barrels still offline and tensions far from resolved, the risk of another sharp surge remains significant.

For now, the market is reacting to optimism, but the underlying crisis continues to loom.