Oil prices eased on Friday after climbing sharply this week, as reports of a possible US-Iran deal raised hopes that the strategically important Strait of Hormuz could reopen within seven days.
Benchmark crude had surged over the previous two days, reaching $106.80 (about Sh13,828) per barrel on Thursday, before retreating below that level on Friday.
The decline followed reports that Washington and Tehran are exploring a phased agreement under which Iran could reopen the Strait of Hormuz while the United States eases its economic blockade of Iran.
The Strait has emerged as a key bargaining point in efforts to end the nearly seven-month US-Iran conflict, with Tehran seeking relief from economic restrictions and Washington pushing for the restoration of unrestricted shipping through the vital oil route.
Iran Proposes Seven-Day Hormuz Reopening
Iranian Foreign Minister Abbas Araghchi said Tehran had proposed reopening the Strait within seven days if Washington accepts its conditions.
The proposal was reportedly communicated to the United States through Qatari mediators this week and is based on terms contained in an earlier memorandum of understanding that had briefly halted the conflict.
“If certain conditions are met, the Strait of Hormuz will be open at the end of seven days, and talks will be restarted,” Araghchi said on Thursday during a meeting with President Masoud Pezeshkian on the sidelines of the United Nations General Assembly.
Araghchi said Iran was not seeking new conditions, arguing that its demands were already contained in the earlier Islamabad memorandum of understanding.
Phased Deal Could Ease Economic Pressure
A senior Iranian official said a phased agreement could provide a possible route out of the current impasse.
Under the reported proposal, the first steps would involve an end to the US blockade and the reopening of the Strait.
Iran could then potentially gain access to some of its frozen assets as part of a wider agreement.
The proposal reflects the difficulty facing both sides, which have so far been reluctant to surrender their leverage before securing commitments from the other party.
Sources familiar with the negotiations said the challenge extends beyond reaching an initial agreement, with both sides seeking assurances that any concessions would be durable.
Hormuz Key to Global Oil Supplies
The Strait of Hormuz is one of the world’s most important energy shipping routes, making any prolonged disruption a major concern for global oil markets.
The waterway connects the Persian Gulf with the Gulf of Oman and provides a critical passage for oil shipments from major producers in the Middle East.
The possibility of its reopening has therefore offered some relief to markets after crude prices climbed sharply this week amid fears that continued disruption could further tighten global supplies.
A sustained reopening could reduce some of the immediate pressure on crude markets, although the direction of prices will also depend on the progress of the wider US-Iran negotiations and the security situation in the region.
Trump Maintains Pressure on Tehran
Washington has continued to maintain pressure on Iran while negotiations take place.
A White House official said U.S. President Donald Trump believes Tehran is desperate for a deal and that Washington remains in a strong negotiating position because of its control of the Strait and the economic pressure imposed on Iran.
The US position has added another layer of uncertainty to negotiations, with neither side appearing willing to give up key leverage without reciprocal concessions.
Oil Market Watches Talks Closely
Oil prices have remained highly sensitive to developments surrounding the Strait since the latest escalation in the US-Iran conflict.
