Key facts
- Crude oil futures prices dropped over 4% on Friday.
- China is reportedly pushing for renewed peace talks between the United States and Iran.
- Brent crude was trading at $88.77 per barrel and WTI at $82.31 per barrel.
- Reports suggest a ceasefire proposal, but concessions from either side are unlikely.
- Tanker traffic through the Strait of Hormuz is minimal due to US-Iran strikes.
- Yemeni Houthis threatened a naval blockade on Saudi Arabia's Red Sea oil export route.
Crude oil prices reversed their climb on Friday, retreating on reports that efforts are being made to negotiate a ceasefire between the United States and Iran. Brent crude was trading at $88.77 per barrel, down from over $90, and West Texas Intermediate was changing hands for $82.31 per barrel. This occurred despite continued missile strikes in the Persian Gulf and President Trump’s threat to punish Iran for the deaths of U.S. troops.
Reports about ceasefire efforts focus on negotiating a ten-day ceasefire, but chances of that happening are considered slim as neither side appears willing to make concessions. An unnamed senior Iranian official cited by Reuters indicated Tehran had received a ceasefire proposal aiming to revive the June deal with the United States, but gave no indication of the leadership's willingness to consider it.
Earlier this week, media reported that tanker traffic via the Strait of Hormuz is almost non-existent due to U.S. and Iran trading missile strikes. Additionally, the Yemeni Houthis threatened to impose a naval blockade on Saudi Arabia, which could impact its Red Sea oil export route. Saudi Arabia has been exporting approximately 4.6 million barrels of crude daily from the Red Sea port of Yanbu as of June, an increase from 1.3 million barrels daily at the start of the year, according to ING commodity analysts Warren Patterson and Ewa Manthey. They warned that any new Red Sea disruption would redirect ship traffic, increasing voyage times and costs, and noted the market does not appear convinced such a blockade would be successful.