- Brent crude neared $93, marking its largest monthly drop since 2020 at about 18% loss
- US-Iran talks suggest a 60-day ceasefire extension and possible reopening of Strait of Hormuz
- Key issues remain on Iran’s nuclear program, sanctions, and Hormuz governance
Oil prices extended losses on Friday, with Brent crude heading for its steepest monthly decline since 2020, as signs of progress in US-Iran negotiations fuelled hopes that disruptions to global energy supplies could eventually ease.
Brent crude slipped towards $93 a barrel, taking its losses for the month to about 18%, while West Texas Intermediate traded near $88. The sharp decline comes after weeks of volatility driven by fears over the prolonged closure of the Strait of Hormuz, a key artery for global oil trade.
Investor sentiment improved after reports suggested that Washington and Tehran had tentatively agreed to extend their ceasefire by another 60 days. According to an Axios report, discussions included provisions that could eventually allow unrestricted shipping through Hormuz, although US President Donald Trump has not yet formally endorsed the proposed terms.
Speaking to reporters, US Vice President JD Vance cautioned that it remained too early to determine whether a final agreement would be reached. Treasury Secretary Scott Bessent also indicated that negotiations were ongoing, saying only that both sides were continuing discussions.
ALSO READ: US, Iran Reach Deal On 60-Day Ceasefire Extension MoU, Trump's Approval Awaited: Report
The decline marks a dramatic reversal from earlier this month when Brent briefly surged above $120 a barrel as supply fears intensified following the effective closure of Hormuz. The waterway traditionally handles roughly a fifth of global crude shipments, making it one of the world's most strategically important energy chokepoints.
However, despite the recent optimism, significant hurdles remain before oil flows can fully normalise.
Key sticking points in negotiations include Iran's nuclear programme, sanctions relief and the future governance of the Strait of Hormuz. Bessent has previously indicated that reopening the waterway and securing Iran's surrender of highly enriched uranium remain critical US demands.
Even if a formal truce extension is reached, energy analysts caution that supply recovery will not be immediate. Mines reportedly placed in shipping channels would need to be cleared, damaged infrastructure repaired and shut-in oil fields restarted. Tankers would also require several weeks to deliver crude to key importing nations.
Meanwhile, supply tightness continues to emerge elsewhere. Recent US inventory data showed distillate stockpiles falling to their lowest levels in more than two decades, while crude inventories at the Cushing, Oklahoma delivery hub declined for a fifth consecutive week.
ALSO READ: US To Shut Down Iranian Airlines' Access To Landing Spots, Refueling: Scott Bessent
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