Oil Heads for Second Weekly Loss as Hormuz Diplomacy Advances

Yahoo Finance Canada reported Friday that both major crude benchmarks are heading for back-to-back weekly losses. Traders are increasingly betting that diplomacy will reopen the Strait of Hormuz and release a flood of deferred supply onto global markets.

Oil Prices Extend Decline Into Second Week

Brent crude was trading near $91.53 per barrel on Friday. That represents a drop of roughly 5% over the week. WTI, the U.S. benchmark, was changing hands near $87.65, shedding more than 7% across the same stretch.

The declines are notable given how far prices have climbed. Both benchmarks remain more than 50% above their levels from a year ago. U.S. and Israeli-led military operations against Iran began on 28 February, triggering the supply crisis.

How the Crisis Pushed Brent to $144

The Strait of Hormuz is a narrow chokepoint in the Persian Gulf. Roughly 20% of the world’s oil and liquefied natural gas ordinarily passes through it. The waterway has been effectively closed since hostilities began.

The International Energy Agency warned this week that more than 14 million barrels per day remains shut in. Cumulative supply losses from Gulf producers have now surpassed one billion barrels. Full normalisation of flows may not arrive until 2027, the agency cautioned.

Markets hit an extreme earlier in May. Brent surged to $144 per barrel before collapsing back toward $90 as peace negotiations picked up momentum. That reversal has defined trading for the past two weeks.

Talks Progress But Core Dispute Remains

U.S. Secretary of State Marco Rubio said Wednesday that negotiations had moved forward. He said Washington would give diplomacy every opportunity to work. But Rubio drew a firm line on one sticking point. Any deal permitting Iran to retain formal authority over the strait would be unacceptable to the United States, he said.

Tehran has insisted on recognition of its control over Hormuz as a precondition for any settlement. Washington has flatly rejected that demand, leaving the two sides at an impasse on the central issue.

Prediction markets reflect cautious optimism nonetheless. Traders on Polymarket put a 74% probability on WTI falling below $50 per barrel by the end of June. That scenario would only materialise in a swift resolution that rapidly restores deferred supply.

Until a formal agreement is reached, analysts say prices will remain sensitive to every diplomatic signal coming out of the talks.

Read Next: What the IEA’s 2027 Supply Outlook Means for Energy Markets