A draft peace agreement will reopen the Strait of Hormuz, according to Iran’s semi-official Mehr News Agency.
Following Pakistan’s announcement that a peace agreement between the United States and Iran had been struck, oil prices ended Friday down, with worldwide benchmark Brent crude closing at its lowest level since the early days of the Iran dispute.
The August Brent crude contract (BRN00) (BRNQ26) ended at $87.33 a barrel, its lowest settlement value since March 5, down 3.4%. According to Dow Jones Market Data, the international benchmark was down 6.2% for the week and has dropped in three of the previous four weeks.
At $84.88 per barrel, the U.S.-traded West Texas Intermediate contract for July delivery (CL.1) (CLN26) fell 3.2% to its lowest level since April 17. FactSet data shows that the U.S. benchmark fell 6.3% this week.
The actions follow statements made by Pakistani Prime Minister Shehbaz Sharif that the United States and Iran had reached “a final, agreed-upon text ?of a ?peace deal,” and that Islamabad is now closely collaborating with both parties to finalize the following stages.In a post on X, Sharif stated, “Peace has never been this close as it is now.” No more information was immediately available.
Those optimism were bolstered by remarks made on Friday afternoon by a top U.S. official. Although those involved in the negotiations are not quite at the finish line yet, the official, who briefed reporters on condition of anonymity, stated that there is “an 80% or 85.” possibility of a settlement in the coming days.
A report from Iran’s semi-official Mehr News Agency that a draft peace agreement would reopen the Strait of Hormuz and abolish oil sanctions on Iran caused oil prices to extend their losses from Thursday’s session earlier on Friday.
A memorandum of understanding might be inked as early as this weekend, possibly in Europe, according to U.S. President Donald Trump, who announced on Thursday that he had canceled planned strikes on Iran and that talks had gotten “to the highest level of Iranian leadership and approved.”
However, Esmail Baghaei, a spokesman for Iran’s foreign ministry, allegedly retorted that “nothing has been finalized.” Additionally, the news agency of the Islamic Republic stated that shipping via the Strait of Hormuz will not resume its pre-conflict levels.Here’s a warning: According to Pavel Molchanov, an investment-strategy analyst at Raymond James, “a breakthrough appeared imminent several times in the last two months, but the two sides didn’t cross the finish line.” “But the big picture is that WTI has been range-bound since the April 7 cease-fire: bouncing between the high $80s and low $100s.”
According to Molchanov, the present amount of oil should be sufficient for gas prices at the pump to drop below $4 per gallon by the end of June. However, he told MarketWatch on Friday that there must be “real evidence” that shipping activity in the Strait of Hormuz is improving in order for those costs to remain stable or drop further.
As of Friday afternoon, the American Automobile Association reports that the national average price for a gallon of normal gasoline was approximately $4.11.
It would take “until the end of July, perhaps longer,” according to Molchanov, for Strait of Hormuz traffic to completely normalize, even if an agreement between the United States and Iran were to be signed this month.
According to a group of analysts headed by Daan Struyven, co-director of global commodities research and head of oil research, Goldman Sachs has reduced its long-term oil projection due to robust supply and decreased demand in 2027.
Due to possible increases in supply from the United States, Brazil, Guyana, Venezuela, and the United Arab Emirates, the investment bank lowered its average Brent price projection for the upcoming year from $85 to $80 per barrel. Additionally, given the anticipated acceleration of the shift to energy alternatives like electric vehicles, it indicated a decline in the need for oil, especially in China.
The impact of the protracted disruption in the Strait of Hormuz has so far been offset by a less severe than anticipated supply shortfall, according to Struyven and his team, who said they continue to forecast Brent averaging $90 per barrel in the fourth quarter of 2026.
