Crude oil markets have experienced heightened volatility due to the ongoing closure of the Strait of Hormuz and uncertainty surrounding potential US-Iran negotiations. According to Rabobank strategist Molly Schwartz, European Union (EU) and Gulf Cooperation Council (GCC) officials anticipate that a deal between the US and Iran could take up to six months to materialize, as discussions over uranium enrichment and nuclear capabilities continue. This extended timeline has unsettled crude oil futures traders, resulting in prices climbing by more than $3 in a single day to reach approximately $98 per barrel [1].
Meanwhile, West Texas Intermediate (WTI) oil prices have pared recent gains, trading around $89.60 per barrel during Asian hours on Friday. The decline is attributed to easing supply concerns ahead of anticipated talks between Washington and Tehran, which are expected to resume over the weekend [2]. US President Donald Trump claimed that Tehran had agreed to terms including abandoning nuclear ambitions, offering 'free oil,' and reopening the Strait of Hormuz, but Iran has not confirmed these assertions. Trump also expressed optimism about the possibility of a permanent ceasefire between the US and Iran before the current 10-day ceasefire expires next week [2].
The closure of the Strait of Hormuz continues to exert significant pressure on GCC economies, with Europe preparing a post-conflict plan to secure shipping lanes and free the Strait. However, this plan is intended to take effect only after hostilities have ceased and does not address the immediate challenges faced by shipping companies. Bloomberg reports that the standoff between charterers and shipowners has resulted in few agreements to load oil inside the Persian Gulf, with vessel-hire costs including a risk premium of about $475,000 per day [1]. ING analysts estimate that approximately 13 million barrels per day of oil supply have been disrupted by the closure [2].
In the broader geopolitical context, Trump stated that he had spoken with Lebanese President Joseph Aoun and Israeli Prime Minister Benjamin Netanyahu, and that Israel and Lebanon have agreed to a 10-day ceasefire set to begin at 5 PM ET. However, CNN reported that Lebanon accused Israel of several acts of aggression, with intermittent shelling affecting villages in southern Lebanon, leading the army to urge residents to delay returning to the area amid ceasefire breaches [2].
CONCLUSION
The ongoing closure of the Strait of Hormuz and uncertainty over US-Iran negotiations have led to significant volatility in oil prices, with futures spiking and WTI paring gains amid mixed signals about supply disruptions and diplomatic progress. Market participants remain cautious as the situation evolves, with substantial supply at risk and no immediate resolution in sight. The market impact is high, and traders are closely monitoring developments for further direction.