Oil markets are closed for the weekend, leaving crude to hold near a three-month low after a steep Friday sell-off driven by growing confidence in an imminent U.S.-Iran peace agreement. West Texas Intermediate settled Friday at $84.88 a barrel — its lowest level since April 17 — while Brent, the international benchmark, settled at $87.33, its lowest since early March. Both benchmarks lost about 6% over the week.
Despite the slide, crude remains up more than 20% since the war began on February 28, a reminder of how much supply-disruption premium is still embedded in the price. The de facto closure of the Strait of Hormuz — the transit point for roughly a fifth of the world’s oil and LNG — remains the structural fact underpinning the market, even as the diplomatic path toward reopening it has advanced faster this week than at any point in the conflict.
The weekend’s price action, when trading resumes Monday, will hinge almost entirely on whether a memorandum is actually signed. Pakistani Prime Minister Sharif said a final text — the “Islamabad declaration” — had been reached, with an electronic signing possible within 24 hours and a formal ceremony expected in Geneva. But Iran’s negotiating team called the Sunday-Geneva claim “completely false,” and both Trump and Vice President Vance disputed leaked details, leaving the outcome genuinely uncertain.
Adding to the bearish backdrop, OPEC on Thursday lowered its forecast for 2026 world oil demand growth to 970,000 barrels per day, down from a previous 1.17 million bpd — its second straight downward revision. The producer group said consumption would eventually rebound, projecting 2027 demand growth of 1.73 million bpd, up 190,000 bpd from its prior forecast. The softer near-term demand view compounds the downward pressure as the market positions for the potential return of disrupted Gulf supply.
The physical market remains tight in the meantime. The U.S. military said commercial ships continued to transit the Strait of Hormuz even as tensions persisted, but tanker traffic stays far below prewar levels, and analysts caution that clearing mines, restarting idled production fields, and repairing damaged energy facilities would delay full normalization even after a signing. Fitch Ratings continues to see a reopening around the end of July and Brent averaging $87 for full-year 2026 — a level the benchmark has now reached.
For traders, the setup into Monday is unusually asymmetric. A confirmed, credible signing would validate the week’s decline and could push benchmarks lower still as the reopening clock starts; a collapse of the talks, or a signing markets deem hollow, would risk a rapid retracement of the past week’s 6% drop. With the outcome resting on weekend diplomacy, the market enters the break in a rare state of suspended animation.
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