Oil retreated toward $98 a barrel on Friday after United States President Donald Trump struck an optimistic tone on the prospect of a permanent ceasefire with Iran, even as Gulf Arab and European officials warned privately that a formal peace agreement could take up to six months to finalise.
Brent crude fell back after surging 4.7 percent on Thursday, while West Texas Intermediate (WTI) traded near $94 a barrel, according to Bloomberg data. The pullback came after Trump told reporters he was unsure whether the current ceasefire needed to be extended and suggested a new meeting with Iranian officials could happen as early as this weekend.
The ceasefire, brokered by Pakistan and announced on April 7, is set to expire on April 21. A first round of direct talks between Washington and Tehran in Islamabad collapsed on April 12 after more than 21 hours of negotiations, with United States Vice President JD Vance saying Iran had refused to accept Washington’s terms. The two sides remain divided primarily over Iran’s nuclear enrichment programme and the terms for reopening the Strait of Hormuz.
Six-month timeline warning
A Bloomberg report published on Thursday cited Gulf Arab and European officials as saying a durable agreement would take approximately six months to negotiate, and that the warring sides should extend the ceasefire to cover that timeframe. Those officials also warned that a global food crisis could develop if the Strait of Hormuz is not reopened by next month, given the disruption to shipping and the supply chains dependent on the waterway.
The International Energy Agency (IEA) has estimated that oil flows through the strait fell to around 3.8 million barrels per day in early April, compared with more than 20 million barrels per day before the conflict. Physical crude prices surged to near $150 a barrel at the peak of the disruption, well above futures prices, as importing nations scrambled for alternative supply.
Markets pricing a deal not yet made
Despite the diplomatic uncertainty, financial markets have moved steadily in the direction of optimism. Bloomberg reported on Thursday that key gauges of bond, currency and equity volatility have fallen almost every day since late March, as investors position for a de-escalation that has not yet materialised in formal terms.
Trump added to that sentiment on Wednesday when he told Fox Business Network the war was “very close to over” and predicted that once a deal was reached, “the stock market is going to boom.” The White House separately said it feels “good about prospects of a deal,” though no second round of talks had been formally scheduled as of Friday morning.
Analysts caution that the gap between market pricing and diplomatic reality remains wide. Iran’s foreign minister, Abbas Araghchi, said after the Islamabad talks that his team was met with what he described as shifting positions by the United States delegation. Iranian parliamentary speaker Mohammad Bagher Ghalibaf, who led Tehran’s team, said Washington had yet to earn the trust of his delegation.
Pakistan’s Field Marshal Asim Munir visited Tehran on Wednesday carrying a message from Washington in an effort to persuade Iran to return to the negotiating table. Iran’s foreign minister said after that meeting that Tehran remains committed to promoting peace and stability in the region.
