Oil Prices Plunge as US and Iran Reach Potential Ceasefire Deal

Oil futures fell more than 1% amid reports of a potential US-Iran ceasefire deal, leading to their steepest weekly decline since April. Analysts see room for further drop.

Oil prices experienced a significant downturn on Friday, with futures falling over 1%, and setting the stage for their most substantial weekly decrease since early April. The decline was triggered by the United States and Iran had reached an agreement to extend a ceasefire and lift shipping restrictions through the Strait of Hormuz. Brent crude futures for July dropped 1.32% or $1.24 to $92.47 per barrel at 0656 GMT, while US oil futures fell by $1.38, or 1.55%, to $87.52 a barrel.

This week's decline in Brent crude stands at 10.5%, the steepest since April 6, and WTI has seen a drop of 9.2%, its biggest weekly loss since April 13. According to sources cited by, both nations agreed on Thursday to extend the ceasefire and ease restrictions through the Strait of Hormuz, a critical maritime route for about one-fifth of global oil and liquefied natural gas supplies.

However, President Donald Trump has yet to approve the deal, and Iranian state media it had not been finalized. IG analyst Tony Sycamore commented, "Consensus remains that the conflict is over, and a deal is coming. As long as this narrative holds, crude oil has room to extend its decline toward trendline support in the low $80s."

Recent trading sessions have seen volatile price movements for both benchmarks, with prices fluctuating by up to $6 due to conflicting signals regarding an end to the Iran conflict and potential reopening of the Strait of Hormuz. While a reopening would offer immediate relief to the oil market, analysts at ING caution that recovery remains uncertain.

ING upstream oil production has significantly declined since the war began, with producers shutting down operations to manage storage constraints. The recovery in production will be gradual rather than immediate, as refineries in the region need time to ramp up output after some infrastructure was targeted earlier in the conflict.