Oil Prices Gain as Iran–US Ceasefire Ambiguities Persist Ahead of Saturday Talks

Global crude prices rose nearly 1% on Friday after attacks on Saudi Arabia’s East-West pipeline and crude-producing facilities dented output and supply capacity, reports said. In early trade, the June contract of benchmark Brent crude was at $96.65, up 0.78% from its previous close, while the May contract of West Texas Intermediate (WTI) rose 0.99% to $98.84 per barrel.

Saudi Arabia’s energy ministry on Thursday said the military strikes have reduced the country’s oil production capacity by nearly 600,000 barrels per day (bpd) and cut flows through its East-West pipeline by roughly 700,000 bpd.

The East-West Pipeline is a 1,200-kilometre-long dual-pipe system that transports crude oil from Saudi Arabia’s Eastern Province to the Red Sea port of Yanbu, enabling exports to bypass the Strait of Hormuz.

Oil markets also remained volatile amid uncertainty surrounding the two-week ceasefire between Washington and Tehran, which US Vice President JD Vance described as ‘fragile’.

Iran has accused the US of breaching conditions outlined in the 10-point peace proposal, arguing that continued Israeli strikes against Hezbollah in Lebanon amount to a ‘proxy’ continuation of the conflict and violate the truce.

Market participants are now closely watching the US–Iran talks scheduled for Saturday, which aim to find a longer-term resolution to the conflict that began on February 28. Any breakdown in negotiations could further disrupt global energy supply chains and increase geopolitical risk premiums in oil prices.

Uncertainty also persists around transit through the Strait of Hormuz, a critical chokepoint through which nearly 25% of global energy trade flows. While Iran has agreed to allow passage through the Strait under certain conditions, the restrictions have added to ambiguity in energy markets.

US President Donald Trump on Thursday said in a post on Truth Social that Iran was doing a “very poor job” of allowing oil shipments through the Strait, adding, “That is not the agreement we have.”

According to reports citing the agreement, Iran has proposed allowing vessels to pass through the Strait subject to conditions including payment of a toll fee and compliance with specific transit regulations.

Tehran has also suggested alternate routes within the waterway after deploying sea mines in certain areas, posing safety risks to commercial shipping. The presence of naval mines has increased insurance costs and heightened concerns over potential supply disruptions.

According to a report by The Guardian, Abu Dhabi National Oil Company (Adnoc) Chief Executive Officer Sultan Al Jaber said on Thursday that the Strait is “not open” despite the ceasefire announcement, adding that transit remains subject to “permission, conditions, and political leverage.” He warned that global energy security and economic stability depend on the Strait being opened fully and without restrictions.

West Asia Tensions Remain Elevated

Geopolitical tensions in West Asia continue to remain high despite the temporary ceasefire announcement. Israel’s military said early Friday that it struck 10 launchers in Lebanon that had fired rockets toward northern Israel on Thursday evening.

Tel Aviv also accused the Iran-backed militant group Hezbollah of launching missiles targeting Israeli territory, triggering air raid sirens in parts of northern Israel. Hezbollah claimed it had targeted Israeli military infrastructure in the northern city of Haifa.

Israel said on Thursday that while it supports the temporary ceasefire framework with the US, the agreement does not include a resolution in Lebanon, as Israel aims to completely dismantle Hezbollah’s military capabilities. However, Iran, along with mediator Pakistan, stated that Lebanon was explicitly included in the ceasefire framework.

Iranian Supreme Leader Ayatollah Mojtaba Khamenei said on Thursday that Iran would seek compensation for damages caused during the conflict and warned of consequences for those responsible for the attacks.

“We will certainly not leave unpunished the criminal aggressors who attacked our country. We will undoubtedly demand compensation for every single damage inflicted,” he said in a statement.