Oil slips as Gulf-Iran Hormuz deal talk spooks market

Oil prices slipped on Friday as investors weighed signals that Gulf states and Iran might be nearing a temporary arrangement to reopen the Strait of Hormuz, a move that could pave the way for broader talks to end the ongoing conflict.

Brent crude futures were down 57 cents, or 0.7%, at $81.92 a barrel by late morning. US West Texas Intermediate futures fell 33 cents, or 0.4%, to $76.96.

The decline comes after a volatile week. Prices had jumped by more than $3 a barrel on Thursday when Iran reviewed a bill to ban US and Israeli vessels from the strait, through which roughly a fifth of the world's oil and liquefied natural gas normally passed before the war began in late February.

However, earlier in the week, prices had fallen on growing hopes of a diplomatic solution. Both benchmarks are now on track for a weekly loss of about 9%.

A key sticking point appears to be fees. A senior Iranian official said Tehran is seeking charges of between 5% and 7% of cargo value from ships using the strait. Oman is reportedly discussing fees of around 3%, while Washington wants no fees at all.

Industry sources suggest the proposed deal faces significant hurdles, including US sanctions and restrictive insurance clauses on any payments. Analysts remain sceptical about the political viability of the arrangement.

"The structure of the Iran-Oman agreement in its current form and the power it yields to Iran is nothing that Trump can accept politically," said Bjarne Schieldrop at SEB Research.

Market analysts say the situation remains highly uncertain. "The market remains in the dark as to what needs to happen for the agreement to be clinched," said Vandana Hari, founder of Vanda Insights.

Adding to the tension, a senior Saudi official said intelligence reports indicate possible imminent coordinated attacks from Iraqi militias and Yemen's Houthis, potentially targeting energy infrastructure, ports, and airports. The Houthis claimed missile and drone attacks on Saudi deployments in Yemen on Thursday.

Investors are now awaiting US non-farm payrolls data due later on Friday, which could influence expectations on interest rates and, in turn, oil demand.