Diplomacy Eases Geopolitical Risk Premium, Weighs on Crude Prices

Oil prices saw significant swings over the past week as markets weighed efforts to ease tensions between the US and Iran against escalating military threats in the Middle East. International benchmark Brent crude futures for October traded at $88.58 per barrel on Friday, down 3.4% from last Friday's close of $91.68.

The decline began after US President Donald Trump paused military strikes on Iran, raising expectations that Washington and Tehran could return to negotiations. The move eased concerns over an immediate disruption to Middle East oil supplies and prompted investors to unwind much of the geopolitical risk premium built into prices during the previous week's rally.

However, concerns over security in the Strait of Hormuz and the Bab el-Mandeb Strait continued to limit losses, with markets closely monitoring talks between Iran and Oman aimed at restoring safe maritime navigation through the strategic waterway.