Oil prices fall as investors await potential Strait of Hormuz deal

Oil prices edged lower on Friday as investors assessed signs that Gulf states and Iran are moving closer to an agreement to reopen the Strait of Hormuz under a temporary arrangement that could pave the way for broader talks aimed at ending the war between Iran and the United States.

In trading, Brent crude futures fell 57 cents, or 0.7%, to $81.92 a barrel by 10:14 GMT, while US West Texas Intermediate crude futures declined 33 cents, or 0.4%, to $76.96 a barrel.

Oil futures had settled more than $3 a barrel higher on Thursday after Iran discussed draft legislation that would ban US and Israeli vessels from passing through the Strait of Hormuz, which handled around one-fifth of global oil and liquefied natural gas supplies before the war began in late February.

Prices had fallen earlier in the week as prospects for a resolution to the conflict improved, leaving both crude benchmarks on track for weekly losses of around 9%.

Disagreements over Strait of Hormuz transit fees

Iran is seeking to impose fees equivalent to between 5% and 7% of the value of cargo shipments on vessels using the strait, according to a senior Iranian official. Oman is discussing a fee of around 3%, while Washington wants shipping through the waterway to remain free of charges.

Oil industry sources said the proposed agreement would be difficult to implement in its current form because of US sanctions and restrictive insurance conditions affecting any payments.

Meanwhile, Saudi Arabia expects imminent coordinated attacks by Iraqi militias from the north and Yemen's Houthis from the south, under the direction of Iran's Islamic Revolutionary Guard Corps, according to a senior Saudi official.

The official, who spoke on condition of anonymity, said Saudi, US, and regional intelligence reports indicate that civilian and economic sites could be targeted, including energy facilities, ports, and airports.

Yemen's Houthis said on Thursday that they had carried out missile and drone attacks against Saudi forces in Marib and Hadramout in Yemen.

US President Donald Trump told reporters on Thursday that he believes the war will end soon.