Oil prices declined on Friday as traders grew optimistic that ongoing peace talks could de-escalate tensions between the United States and Iran, reducing the risk of a full-blown conflict. Brent crude settled at $93.09 a barrel, down 2.04%, while West Texas Intermediate (WTI) ended the session at $90.54, slipping 2.69%, according to Reuters.
The selloff came despite global oil inventories reaching what Exxon Mobil senior vice president Neil Chapman described as “unheard of” low levels. Analysts caution that if the disruption at the Strait of Hormuz persists through the summer fuel season, a second price shock could follow as demand drains already thin stockpiles. Mehmet Beceren of Rosenberg Research noted that when buffers shrink, “prices have to do more of the adjustment work.”
Brent crude traded at $97.44 earlier in the morning, down 51 cents from Thursday but still roughly $32 above year-ago levels. The U.S. Energy Information Administration had projected Brent near $106 a barrel for May and June, but actual prices have fallen short of that forecast. The World Bank’s baseline scenario had Brent at $86 for 2026, assuming the worst of the supply shock ends this month and shipping normalizes by late 2026.
Ceasefire talks have produced mixed signals. Petroleum Development Oman reported that Mina al Fahal port remained operational after an explosion near its mooring berths. Meanwhile, Hezbollah’s Naim Qassem rejected a U.S.-brokered ceasefire in Lebanon, and Iran has linked any deal with Washington to a Lebanon truce, Reuters reported.
Technical analysts are watching for further downside. LiteFinance’s Elliott Wave analysis indicated that WTI “remains likely to decline,” with $95.15 identified as a pivot point. A Moomoo/Futunn market update pegged $86 as key support, where buyers might step in. Despite the pullback, both Brent and WTI were on track to snap a three-week losing streak.
OPEC maintained its forecast for oil-demand growth at 1.2 million barrels per day, even as Iranian exports dropped to a six-year low due to a U.S. naval blockade. Soft Chinese demand has also pressured prices. The IMF warned Thursday that the macro risk picture has turned real, with oil about 3% above its April baseline growth view. “The price path would depend on the duration of the war and how fast Hormuz reopens,” IMF spokesperson Julie Kozack told reporters.
Fitch Ratings cut its 2026 global growth forecast and now sees Brent at $87 a barrel, as reported by The Wall Street Journal. Across benchmarks, WTI, Brent, and Murban crude all fell, signaling broad selling pressure. Murban, a key Middle East crude for Asian buyers, was not immune to the decline.
The case for lower prices hinges on diplomacy. If peace talks stall or inventories continue to drop into late June, prices may not fall. Chapman warned that dated Brent, which prices over 60% of global crude trade, could spike to $150-$160 a barrel if stocks fall further. The World Bank projects Brent averaging $95-$115 this year if fighting spreads or regional flows remain shut.
Traders remain hopeful for a positive headline despite the lack of a clear solution. Joseph Tanious of Northern Trust Asset Management called the Strait of Hormuz a “persistent geopolitical chokepoint,” highlighting vulnerabilities that could still roil markets.
