Oil futures eased in Asian trade on Friday and were on track to record a weekly decline after developments in U.S.-Iran diplomacy reduced some of the premium traders had been paying for potential supply disruptions.
As of 20:46 ET (00:46 GMT), Brent oil futures for May were down 0.7% at $107.8 per barrel, while U.S. West Texas Intermediate crude slipped 0.8% to $93.72 per barrel. Both contracts were positioned to fall by more than 4% over the week.
Market participants pared back expectations of immediate supply shocks following a U.S. announcement that President Donald Trump would pause attacks on Iran's energy infrastructure for 10 days at Tehran's request. The White House statement also said negotiations with Iran were "going very well," language that lifted hopes for a diplomatic breakthrough.
Iranian officials, according to the same reporting, conveyed a more cautious assessment of the talks. That divergence in tone underscored persistent uncertainty about how durable any de-escalation might be.
The Strait of Hormuz - a vital chokepoint through which a substantial volume of global crude transits - had been a particular focus of concern for traders. With the immediate prospect of strikes reduced, near-term worries about disruptions to shipping routes and energy facilities eased, prompting the pullback in prices.
Oil markets have seen heightened volatility in recent weeks. Prices surged sharply amid rising tensions involving the United States, Israel and Iran, reflecting fears that conflicts could interrupt flows or damage energy infrastructure. But repeated signals that hostilities might be dialed down have produced retracements as traders reassess the scale and duration of any possible supply interruptions.
Earlier in the week, crude prices tumbled after a separate announcement that previously planned strikes had been delayed. Even with the recent declines, benchmark prices remain elevated relative to levels seen before the conflict intensified, reflecting the residual risk premium still priced into the market.
Short-term dynamics will likely continue to hinge on public comments from the parties involved in the talks and any operational developments around key shipping lanes and energy facilities. For now, the market reaction shows how quickly perceived supply risk can be re-priced when diplomatic signals shift.