Brent crude and WTI, its US counterpart, are heading for a second consecutive weekly decline as traders bet that a diplomatic resolution to the US-Iran conflict will eventually reopen the Strait of Hormuz, even as hostilities continue to flare.
Brent was trading around $91.53 per barrel on Friday, down roughly 5% on the week, while WTI was around $87.65, having shed more than 7% over the same period.
Both benchmarks remain sharply elevated against pre-war levels, with Brent still more than 50% higher year-on-year since US and Israeli-led strikes began against Iran on 28 February.
The weekly declines follow a sharp reversal earlier this month, when Brent hit $144 per barrel before collapsing toward $90 as peace talks gathered momentum.
The Strait of Hormuz, a narrow waterway through which roughly 20% of the world's oil and liquefied natural gas normally flows, has been effectively closed since the conflict began, with cumulative supply losses from Gulf producers now exceeding one billion barrels according to the International Energy Agency.
The IEA warned this week that more than 14 million barrels per day remains shut in, adding that full normalisation of supply may not occur until 2027.
Despite the scale of disruption, markets are pricing in an eventual settlement, with traders at Polymarket assigning a 74% probability to WTI falling below $50 per barrel by the end of June, a level that would only be reached in a rapid resolution scenario releasing deferred supply.
US Secretary of State Marco Rubio said on Wednesday the talks had made progress and that Washington would give negotiations "every chance to succeed," though he insisted that Iran maintaining control of the strait would make any deal "unfeasible."
Iran has demanded recognition of its authority over Hormuz as a condition of any agreement, a position Washington has flatly rejected.