Oil prices moved lower on Friday after reports suggested that Iran and Oman were preparing talks with Gulf states aimed at restoring commercial shipping through the Strait of Hormuz.
Despite the pullback, crude remained on track for a strong weekly gain, with Brent still positioned to finish the week above the psychologically important $100-per-barrel level.
Brent and WTI Oil Prices Decline
Brent crude futures fell around 2.9% to $104.51 per barrel by 08:11 ET.
Meanwhile, West Texas Intermediate crude futures dropped approximately 3% to $99.40 per barrel.
Earlier, Brent briefly climbed to $109.97, its highest level since May.
The global benchmark remained on course to close the week above $100 for the first time in almost four months.
Hormuz Talks Ease Supply Fears
The decline in oil prices followed reports that Gulf foreign ministers were preparing to meet with Iran in an effort to secure arrangements for commercial shipping through the Strait of Hormuz.
According to the Financial Times, the meeting is expected to take place on Monday in the Omani coastal city of Salalah.
Iran and Oman had already indicated in August that discussions were underway over commercial shipping through the strait.
However, uncertainty remains over whether any agreement can significantly improve regional shipping conditions.
Strait of Hormuz Traffic Remains Disrupted
Shipping activity through the Strait of Hormuz has fallen sharply.
Vessel transits reportedly dropped to just seven on Thursday, compared with a 10-day moving average of around 15.
The decline highlights the continuing disruption to one of the world’s most important energy shipping routes.
Concerns over restricted flows through Hormuz have been a major factor behind the recent surge in crude prices.
Middle East Conflict Keeps Oil Above $100
Oil prices climbed above $100 earlier in the week as tensions between Iran and the United States intensified.
Iran said it had attacked several vessels near Hormuz, while the U.S. reported retaliatory strikes against Iranian tankers.
The escalation reinforced concerns that the conflict could continue to threaten global crude supplies.
As long as tanker traffic remains restricted, traders are likely to maintain a geopolitical risk premium in oil prices.
Red Sea Risks Add Further Pressure
Supply concerns are not limited to the Strait of Hormuz.
Iran-backed Houthi forces in Yemen reportedly captured the strategic port city of Mokha, increasing concerns about shipping near the Bab el-Mandeb Strait.
The waterway connects the Red Sea with the Gulf of Aden and represents another critical route for global energy and commercial shipping.
ING analysts said recent developments could increase the threat to vessels operating around Bab el-Mandeb.
Oil Market Remains Highly Sensitive to Geopolitics
Friday’s decline suggests traders are responding positively to signs of possible diplomatic progress.
However, the broader oil market remains heavily influenced by geopolitical developments across the Middle East.
With Brent still trading above $100 and major shipping routes under pressure, supply risks are likely to remain a key driver of crude prices in the near term.
