Oil prices head for sharp weekly drop as diplomacy outweighs Middle East risks

Oil prices were heading for weekly losses of more than 6% on Friday as growing optimism over a possible US-Iran agreement overshadowed persistent geopolitical tensions and supply risks in the Middle East.

International benchmark Brent crude traded at $100.85 per barrel at 15.00 local time (1200 GMT), down 6.8% from last Friday’s close of $108.17.

US benchmark West Texas Intermediate (WTI) also fell 6.8% on a weekly basis to $95.05 per barrel, compared with $101.94 a week earlier.

Crude markets remained highly volatile throughout the week as investors weighed escalating tensions around the Strait of Hormuz against signs of a possible diplomatic breakthrough between Washington and Tehran.

Prices started the week higher amid rising tensions in the strategic waterway, with the US voicing support for commercial shipping while Iran warned against potential American involvement in the conflict.

Oil prices remained above the $100 level on Tuesday as concerns over regional stability and energy supply security continued to support the market.

However, prices plunged on Wednesday, with crude benchmarks dropping around 7% after reports suggested Washington and Tehran were moving closer to a diplomatic understanding that could reduce the risk of supply disruptions from the Middle East.

On Thursday, oil prices recovered modestly as uncertainty over energy flows through the Strait of Hormuz and declining US crude inventories lent some support to the market.

Prices edged higher again on Friday after renewed tensions between the US and Iran in the Strait of Hormuz revived concerns over global energy supply security.

Despite late-week gains, oil markets remained on track for a sharp weekly decline as expectations of easing tensions between the US and Iran outweighed fears of immediate supply disruptions.

• International benchmark Brent crude
• Oil Prices
• West Texas Intermediate (WTI)