Brent crude steadied on Friday but remained set for a more than eight per cent weekly decline as traders weighed fading US-Iran truce prospects after talks were called off and Israel escalated attacks in Lebanon.
Brent crude futures were little changed at $79.78 a barrel by 08:20 GMT.
The front-month July contract for US West Texas Intermediate crude, which expires on Monday, rose nearly $1 or 1.3 per cent to $77.59 a barrel. The more actively traded WTI August contract was up 13 cents at $75.98 a barrel.
Switzerland said US talks with Iranian negotiators on a pact to end the Middle East conflict would not take place on Friday, as Vice President JD Vance dropped his travel plans, adding to uncertainty over the prospects for a lasting truce.
"Traders are reassessing the situation, with some scepticism returning about how quickly the agreement will deliver real changes on the ground," said Tim Waterer, chief market analyst at KCM Trade.
"I think for crude prices to take the next step lower, traders will want to see evidence of shipping traffic picking up in the Strait of Hormuz. Brent could be operating largely in a $75-$90 band in the near term."
On Thursday both benchmarks hit their lowest since the conflict began in early March as several tankers, including three Saudi-flagged vessels carrying six million barrels of crude, sailed through the strait hours after the US and Iranian presidents signed an interim deal to end their war.
Analysts expect the deal to release more than 85 million barrels of oil stranded in the Middle East gulf into global markets.
Around 20 per cent of global oil and LNG supply transits Hormuz, but recovery in flows and production after the US-Iran deal could take several months, banks said.
Citi said its base case, with a 60 per cent probability, sees sustained normalisation in flows, with oil markets moving into surplus and prices trending lower over the next six to 12 months to around $60–65 per barrel by the first quarter of 2027.
World demand will rise to 113.3 million bpd in 2030 from 105.1 million barrels per day in 2025, OPEC said in its 2026 World Oil Outlook.
Iraq's oilfields are ready to resume production and output will gradually return to normal, restoring previous rates, Oil Minister Basim Mohammed said.
However, Israel has continued its war against Hezbollah in Lebanon, raising questions about whether the US-Iran peace agreement will hold.
(Reporting by Anushree Mukherjee in Bengaluru, Seher Dareen in London, Mohi Narayan in New Delhi and Helen Clark in Perth; Editing by Clarence Fernandez and Jan Harvey)
