PERTH, May 29 - Oil futures moved lower on signs that Washington and Tehran may be nearing an agreement to extend a ceasefire and loosen constraints on transit through the Strait of Hormuz, but cautious remarks from U.S. Vice President JD Vance limited the slide.
At 0105 GMT, July Brent crude futures, which expire at Friday's settlement, were down $0.35, or 0.37%, at $93.36 a barrel. U.S. crude futures fell $0.63, or 0.71%, to $88.27 a barrel. The more actively traded August Brent contract fell $0.46, or 0.50%, to $92.24.
Prices have been volatile in recent sessions, and showed a notable weekly decline. For the week, benchmarks were down by more than 8%, with Brent touching a low of $87.11 after earlier reaching a high of $109.47 the previous week.
Market swings of as much as $6 in both benchmarks were recorded over conflicting indications about a possible end to the three-month Iran war and the potential re-opening of the Strait of Hormuz - a strategic shipping lane that handles roughly one-fifth of the world’s oil and liquefied natural gas volumes. Despite talk of easing restrictions, traffic through the strait remains a small fraction of pre-war levels.
On Thursday, the U.S. and Iran reached an agreement to extend their ceasefire and lift restrictions on shipping through the strait, though the U.S. President Donald Trump has yet to approve it and Iranian state media reported the deal had not been finalised.
Vice President JD Vance told reporters that talks with Tehran were "close" but that Washington was "not there yet" on a final agreement. He said there were remaining sticking points concerning Iran's enriched uranium stockpile and the broader question of enrichment. "I can’t guarantee that we’re going to get there, but right now I feel pretty good about it," Vance added, while also saying the U.S. remained in a position where it could substantially set back Tehran’s nuclear program.
Analysts and market participants continued to weigh the implications of a potential ceasefire extension and any restoration of shipping through the Strait of Hormuz, with oil prices reflecting both the prospect of additional supply flowing more freely and the caution warranted by unresolved political and technical details.
Summary
Oil prices edged down after reports of a possible U.S.-Iran agreement to extend a ceasefire and relax restrictions on transit through the Strait of Hormuz. Cautious comments from U.S. Vice President JD Vance that negotiations were "close" but not complete helped limit further declines. Brent and U.S. crude fell modestly, capping a week of pronounced volatility.
Key Points
- Brent July futures were at $93.36 a barrel, down $0.35; U.S. crude was $88.27, down $0.63 at 0105 GMT.
- Benchmarks fell over 8% for the week, with Brent ranging from $109.47 to $87.11.
- Sectors affected include energy commodity markets, shipping and maritime logistics, and related financial markets sensitive to oil-price moves.
Risks and Uncertainties
- Final approval for the reported U.S.-Iran agreement remains pending - the U.S. President has not yet approved it, and Iranian state media said the deal was not finalised, creating execution risk for changes in shipping and supply.
- Talks still face substantive hurdles - Vice President Vance identified sticking points on Iran’s enriched uranium stockpile and the issue of enrichment, leaving outcomes uncertain and potentially keeping prices volatile.
- Maritime traffic through the Strait of Hormuz is still well below pre-war levels, meaning any re-opening could take time and the transition back to higher throughput is uncertain.