Crude oil fell more than 3% to below $85 per barrel on Friday, hitting an eight-week low as optimism grew that the US and Iran may be nearing an interim peace agreement, despite lingering uncertainty. Officials indicated that both sides are progressing toward a deal to reopen the Strait of Hormuz, potentially ahead of the upcoming G7 meeting. Iranian Foreign Minister Abbas Araghchi said a Memorandum of Understanding between the two countries is closer than ever, reinforcing expectations that the protracted conflict may be approaching a resolution.
Market participants, however, remain cautious after earlier reports of imminent breakthroughs failed to yield concrete results. Geopolitical risks persist, with reports that US forces have intercepted Iranian drones operating near commercial vessels. Oil prices briefly pared losses after President Trump questioned the reported draft agreement, stating that the terms made public did not accurately reflect what had been discussed.