Oil Prices Fall as Hormuz Deal Looms Amid War Tensions

Oil prices dropped on Friday as investors weighed signals that Gulf states and Iran were close to reaching a deal to reopen the Strait of Hormuz under a temporary arrangement. The move is aimed at allowing for broader talks to bring an end to the Iran war.

Brent crude futures fell 57 cents, or 0.7%, to $81.92 a barrel, while U.S. West Texas Intermediate futures dropped 33 cents, or 0.4%, to $76.96. Prices had surged over $3 a barrel on Thursday after Iran reviewed a bill to ban U.S. and Israeli vessels from the Strait of Hormuz.

Despite the potential deal, analysts warned that hostilities between Iran and the U.S. are not yet over. Iran is seeking fees of 5-7% of cargo prices for ships using the strait, while Oman is discussing a fee of around 3%. The U.S., however, wants no fees at all.

The proposed deal faces challenges due to U.S. sanctions and restrictive insurance clauses on payments. Bjarne Schieldrop from SEB Research said that Trump would face heavy criticism if he accepted the agreement in its current form.