Brent heads for a 9% weekly loss as traders assess prospects for the US-Iran truce

Brent crude prices were on track to post a weekly decline of 9% on Friday as traders assessed diminishing prospects for a lasting truce between the United States and Iran after talks were canceled and Israel intensified its attacks in Lebanon.

Brent crude futures fell by 24 cents, or 0.3%, to $79.61 per barrel by 11:00 GMT, putting the benchmark on course for a second consecutive weekly decline.

Switzerland said that talks between US officials and Iranian negotiators aimed at reaching an agreement to end the Middle East conflict would not take place on Friday. At the same time, US Vice President JD Vance canceled his travel plans, adding to uncertainty over the prospects for a permanent ceasefire.

Tamas Varga, an analyst at PVM Oil Associates, said: "This highlights the difficult road ahead in achieving a full and sustained resumption of oil flows through the Strait of Hormuz." He added: "Headlines related to an extended ceasefire agreement will undoubtedly continue to influence market sentiment."

Both benchmark crude contracts hit their lowest levels since the early days of the conflict on Thursday after several oil tankers, including three Saudi-flagged vessels carrying a combined 6 million barrels of crude, passed through the strait just hours after the US and Iranian presidents signed a temporary agreement to end the war.

Analysts expect the agreement to return more than 85 million barrels of oil currently stranded in the Gulf region to global markets. The deal also includes the removal of US sanctions on Iranian oil, which would add further supplies to the market.

Around 20% of global oil and liquefied natural gas supplies pass through the Strait of Hormuz. However, the recovery of flows and production following the US-Iran agreement could take several months.

Citigroup said its base-case scenario, with a 60% probability, assumes a continued normalization of oil flows, leading to a market surplus and lower prices over the next six to twelve months, with crude potentially falling to around $60-$65 per barrel by the first quarter of 2027.

Commerzbank said oil supplies are expected to recover gradually and lowered its year-end Brent forecast to $80 per barrel from $85 previously. However, it still expects prices to remain above pre-war levels for most of next year.

Iraqi Oil Minister Bassem Mohammed said Iraqi oil fields are ready to resume production and that output will gradually return to its previous normal levels.

On the demand side, OPEC said in its 2026 Annual World Oil Outlook that global oil demand is expected to rise to 113.3 million barrels per day by 2030, up from 105.1 million barrels per day in 2025.

However, Israel's continued military campaign against Hezbollah in Lebanon has raised questions about the durability of the peace agreement between the United States and Iran.