Oil prices rebounded on Friday as peace efforts to end the Iran war hit an early snag, with Israeli strikes on southern Lebanon signaling the conflict is far from truly winding down.
By 0645 GMT, Brent crude futures had added 51 cents, or 0.64%, to trade at $80.36 a barrel, while U.S. West Texas Intermediate crude jumped $1.28, or 1.7%, to $77.88. The front-month WTI July contract, which expires Monday, was leading the bounce; the more actively traded August contract was up a more modest 59 cents, at $76.44.
Even with Friday’s gains, both Brent and WTI remained on track for a weekly loss of roughly 8%, a reminder of just how sharply sentiment has swung since Sunday’s signing ceremony.
The proximate cause of Friday’s reversal was logistical, but its implications were anything but. Swiss officials confirmed that planned talks between U.S. and Iranian negotiators, intended to begin turning last weekend’s memorandum of understanding into a durable settlement, would not go ahead as scheduled.
Vice President JD Vance, who was due to lead the American delegation to the Bürgenstock resort in the Swiss canton of Nidwalden, scrapped his travel plans, with the White House citing unresolved logistical challenges around the meeting.
Behind the scenes, the picture looked messier still. Al Jazeera reported that Vance’s delegation had been ready to depart Thursday night, but the trip was called off at the last minute after Israeli bombing in southern Lebanon killed at least three people overnight.
On the Iranian side, there was no confirmation that negotiators would even travel, with Tehran’s Tasnim news agency saying officials first wanted to see evidence that the interim agreement, which folds Lebanon into the broader U.S.-Iran ceasefire, was actually being implemented on the ground.
Iran’s parliamentary speaker, who was floated as a possible lead negotiator, was reportedly not expected to make the trip either, with the continuing Israeli strikes cited as the rationale.
The episode crystallized a worry that had been building since the deal was signed: that a 60-day clock for negotiating a final settlement, including limits on Iran’s nuclear program, was already running before the first formal meeting had even been scheduled.
For oil traders, the stalled talks were enough to halt and briefly reverse a slide that had taken both benchmarks to their lowest levels since early March. On Thursday, several tankers, including three Saudi-flagged vessels carrying a combined 6 million barrels of crude, sailed through the Strait of Hormuz, hours after Presidents Trump and Pezeshkian put their signatures on the interim accord.
U.S. officials had been quick to tout the early movement: Vance told reporters Thursday that roughly 12.5 million barrels had transited the strait in a single night, the highest tally since the war began, and that gasoline prices had dipped below $4 a gallon for the first time since fighting erupted.
That momentum is now in question. “Prices may have bottomed out, and we may see a renewed climb accompanied by plenty of volatility as cracks have already emerged in the memorandum of understanding,” said Vandana Hari, founder of oil market analysis provider Vanda Insights. “This is not the geopolitical backdrop that would give the market any confidence in resuming Hormuz transit.”
Tim Waterer, chief market analyst at KCM, struck a similarly cautious note, arguing that traders want proof, not promises, before pricing in a full normalization of shipping through the chokepoint.
Roughly a fifth of the world’s seaborne oil and LNG passed through the strait before the war, and analysts say a genuine return to pre-conflict trade patterns is plausible in the coming months but only if the fragile U.S.-Iran framework holds.
The stakes for global energy markets are considerable. Analysts estimate the deal, if implemented, would eventually release more than 85 million barrels of crude that have been stranded in the Middle East Gulf since the conflict choked off normal tanker traffic.
The agreement also calls for the lifting of U.S. sanctions on Iranian oil, a step that would add yet another stream of barrels to an already well-supplied market; the International Energy Agency has gone so far as to suggest the market could tip into a significant surplus by 2027 if the Strait reopens fully.
That overhang explains why crude has been so volatile in both directions: sharp drops on any sign of de-escalation and equally sharp, if more tentative, rebounds whenever the diplomatic process shows signs of strain.
Friday’s bounce, traders and analysts agreed, looked less like a vote of confidence in a return to full-blown conflict than a reflexive unwinding of bets that had been placed on a smooth and rapid reopening of the Gulf’s most important shipping lane.
For now, the war’s 60-day negotiating window remains open, and Washington and Tehran have both signaled they still want a final deal. But with Israeli strikes continuing in Lebanon and the first scheduled face-to-face talks already postponed, oil markets are signaling they are not yet ready to call the crisis over.
WHAT YOU SHOULD KNOW
Oil’s rebound on Friday wasn’t a bet on renewed war; it was a reflex to a stalled handshake. The U.S.-Iran truce is real but fragile: the first follow-up talks collapsed before they began, undercut by fresh Israeli strikes on Lebanon and mutual hesitation in Washington and Tehran.
Markets are now caught between two forces: a massive supply overhang (85M+ stranded barrels, lifted sanctions, and a possible 2027 surplus) pulling prices down and the risk that the 60-day negotiating clock runs out before a final deal is reached, pulling prices back up.
