Crude oil prices slipped as investors reacted to hopes that a diplomatic solution could end the war between the U.S. and Iran [1].
A peace deal would likely reopen the Strait of Hormuz, easing global supply-risk concerns and reducing the volatility currently affecting energy and commodity markets [2].
Brent crude was priced at $95.24 per barrel, down 0.22% [1], while West Texas Intermediate (WTI) crude sat at $92.94 per barrel, a decrease of 0.11% [1]. These figures follow a volatile period in which crude saw a 3% loss on Thursday [1]. Other reports indicate a sharper decline, with oil futures falling more than two% on Friday, marking the steepest weekly drop since early April [3].
President Donald Trump said Iran is "being reasonable" and that he may give them until early next week to make a peace deal [4]. This timeline has pressured oil prices as the market prices in the possibility of a ceasefire.
Gold remained steady during this period, trading between $4,450 and $4,460 per ounce [1]. This stability follows a Thursday session where gold prices steadied after hitting a 1% low [5]. Market analysts said that the hope for a peace deal has offset broader inflation fears that typically drive gold demand [6].
Global exchanges have seen stocks rebound as crude oil fell sharply after a previous rise, sparking a reversal in market sentiment [2]. The potential for a diplomatic resolution continues to weigh on energy prices, as any agreement to stabilize the region would remove a significant geopolitical premium from the cost of a barrel of oil [2].
“Iran is "being reasonable" and I will maybe give them until early next week to make a peace deal.”
The sensitivity of oil prices to the Strait of Hormuz highlights the region's role as a global energy chokepoint. If a diplomatic deal is reached, it would likely lead to a sustained decrease in the 'geopolitical risk premium' currently baked into crude prices, potentially lowering energy costs globally while reducing gold's appeal as a safe-haven asset.
