Oil prices edge lower as diplomatic progress between the US and Iran eases supply concerns, though skepticism persists over key disputes.
West Texas Intermediate crude remains below $98.00, extending a near 4% weekly decline amid cautious optimism over US-Iran peace talks. Diplomatic advances, including Pakistani mediation efforts, have tempered supply fears, though unresolved issues like Iran’s nuclear program and the Strait of Hormuz keep markets wary.
Despite the recent pullback, WTI trades over 30% above pre-war levels, with the Hormuz blockade entering its third month. The EIA projects a widening oil deficit, forecasting consumption to outpace production by 2.56 million barrels per day in 2026, potentially rising to 8.43 million barrels per day in Q2 2026.
Market sentiment remains cautious as Iran and Oman discuss permanent transit tolls for Hormuz, while UAE officials warn oil flows may not normalize until 2025, even if hostilities cease immediately.