An Iranian proposal on negotiations with the US sent crude oil futures diving on Friday, but prices remained on track for weekly gains, with Tehran still blocking the Strait of Hormuz and the US Navy blocking exports of Iranian crude.
Brent crude futures for July were down $1.62, or 1.47 per cent, at $108.78 a barrel by 10:16 CDT (15:16 GMT). West Texas Intermediate futures lost $3.40, or 3.24 per cent, to $101.67.
Iran sent its latest proposal for negotiations with the United States to Pakistani mediators on Thursday, state news agency IRNA reported on Friday, a move that could improve prospects for breaking an impasse in efforts to end the Iran war.
Still, the Brent benchmark and WTI were poised for a gain over the week. Brent's June contract hit $126.41 a barrel on Thursday, marking the highest level since March 2022, before ending the session down.
"This Iran proposal has given hope to the market that there is an off-ramp for the United States," said Phil Flynn, senior analyst with Price Futures Group.
Oil prices have been on the rise since the US and Israel attacked Iran at the end of February, resulting in the closure of the Strait of Hormuz and the disruption of shipments of about a fifth of the world’s oil and liquefied natural gas supply.
A ceasefire has been in place since April 8. UAE presidential adviser Anwar Gargash said on Friday Tehran could not be trusted over any unilateral arrangements it makes for the Strait of Hormuz, in a sign of deep mistrust on all sides.
A senior official of Iran's Revolutionary Guards had threatened on Thursday "long and painful strikes" on US positions if Washington renewed attacks on Iran, pushing oil prices to intraday peaks before retreating.
US President Donald Trump was scheduled to receive a briefing on Thursday on plans for a series of fresh military strikes on Iran to compel it to negotiate an end to the conflict, a US official told Reuters.
(Reporting by Erwin Seba in Houston, Stephanie Kelly in London and Helen Clark in Melbourne; Editing by David Goodman, Emelia Sithole-Matarise and Nia Williams)
