• Oil prices showed volatility amid ongoing peace talks between the US and Iran.
• Strait of Hormuz remains a critical chokepoint with about 20% of global oil supply affected.
• Market remains cautious despite optimism following a ceasefire between Israel and Lebanon.

Oil prices exhibited fluctuations on Friday as optimism regarding peace talks between the US and Iran emerged. Brent crude futures dropped $1.34 to $98.05 per barrel, while US West Texas Intermediate (WTI) crude fell $1.65 to $93.40. This decline follows a brief surge in prices due to disruptions from ongoing conflicts in the Middle East, particularly the closure of the Strait of Hormuz, which typically handles around 20% of global oil supply, according to Channel News Asia and Reuters.

The market's reaction reflects the recent 10-day ceasefire between Israel and Lebanon and President Donald Trump's announcement that US-Iran negotiations may resume. Trump stated, "We're going to see what happens. But I think we're very close to making a deal with Iran," highlighting a potential breakthrough in diplomatic discussions on Iran's nuclear capabilities. However, analysts at ING noted that about 13 million barrels per day have been disrupted due to ongoing conflicts, emphasizing the ongoing supply concerns, as reported by Reuters and India Times.

Despite the optimism surrounding the potential talks, the ongoing conflict and closures in the Strait of Hormuz continue to weigh heavily on global oil prices, which had previously surged nearly 50% in March. With prices now fluctuating within the $90 range, economists predict a continued volatility in crude prices until a stable resolution is reached regarding the Middle East conflict, according to Reuters and India Times.