Crude oil prices declined on Friday after reports suggested that the United States and Iran are likely to extend their ceasefire agreement following recent military tensions in West Asia.
International benchmark Brent Crude fell 0.9 percent to around $92.87 per barrel during Asian trading hours.
American benchmark WTI Crude also dropped more than 1 percent and was trading near the $88 per barrel mark.
The decline came just a day after oil prices had surged sharply following attacks by both countries on each other’s assets in the Gulf region.
Oil Had Jumped After Gulf Attacks
On Thursday, Brent Crude was trading near $98 per barrel, while WTI Crude was around $92 per barrel.
Crude prices had jumped more than 3 percent after the United States launched an attack on Iran’s Bandar Abbas port.
Iran later retaliated by attacking a US military base in the region that was believed to be linked to the American strike.
The fresh conflict raised concerns about possible supply disruptions and shipping risks in the Gulf region, pushing global oil prices higher.
Markets React To Possible Ceasefire Extension
Oil prices started falling after reports emerged that both countries may agree to extend the ceasefire first signed in April.
The two sides are also expected to continue peace negotiations, although a final decision on extending the ceasefire has not yet been officially confirmed.
According to a Reuters report, crude oil prices have declined 10.5 percent this week, marking the sharpest weekly fall since the week ending April 6.
Experts believe oil prices could decline further towards the $80 per barrel level if the ceasefire continues and diplomatic talks remain stable.
Investors Remain Cautious
Despite the latest fall, oil prices continue to remain volatile because of uncertainty around the conflict.
US President Donald Trump had earlier said that a broad agreement between the US and Iran had largely been negotiated and only final details remained.
He had also stated that the Strait of Hormuz would remain open under the proposed agreement.
However, the US launched strikes on Iran shortly after those comments, highlighting how fragile the diplomatic situation remains.
Analysts say global energy markets are likely to remain sensitive to any new developments in West Asia over the coming days.
