Oil futures fell around 2% on Friday and were on track to record their largest weekly loss since early April, following reports that the United States and Iran had reached an agreement on a possible extension of a ceasefire.
During trading, Brent crude futures for July delivery dropped $1.66, or 1.77%, to $92.05 per barrel.
The more active August contract fell $1.63, or 1.76%, to $91.07. US crude futures declined $1.55, or 1.74%, to $87.35.
Brent crude fell around 11% over the week, its largest weekly decline since the week ending April 6, while West Texas Intermediate dropped around 10%, the biggest weekly loss since the week ending April 13.
Giovanni Staunovo, analyst at UBS, said: "Although oil flows through the Strait of Hormuz remain restricted and oil inventories are declining, the market's focus remains on the possibility of the United States and Iran reaching a deal."
Sources told Reuters that the United States and Iran reached an agreement on Thursday to extend the ceasefire and lift restrictions on navigation through the Strait of Hormuz, but US President Donald Trump has not yet approved it. Iranian state media reported that the final touches have not yet been put to it.
Prices have been volatile in recent sessions, with the two crude benchmarks fluctuating in a range of up to 6%, due to mixed signals over the prospects of the Iran war ending and the reopening of the strait, through which around one-fifth of the world's oil and liquefied natural gas supplies normally pass.
Traffic through the strait remains only a fraction of its pre-war level. Analysts at ING said that reopening the strait would provide an immediate relief to the oil market, but a recovery remains uncertain.
Japan, which relies heavily on oil imports from the Middle East, recorded a 66% decline in crude oil imports last month compared with April 2025.
Commerzbank raised its Brent crude price forecast to $90 per barrel by the end of September and $85 by year-end.