Oil prices steady as US-Iran keep technical talks alive despite fresh attacks

Oil prices steadied on Friday after the United States confirmed that technical negotiations with Iran remain on track, offering markets some reassurance despite fresh military strikes that have pushed a fragile ceasefire to the brink.

While Brent and WTI crude futures slipped marginally in early trade, both benchmarks remained on course for strong weekly gains as investors continued to factor in the risk of disruptions to oil flows through the Strait of Hormuz.

Brent crude futures fell 6 cents, or 0.08%, to $76.24 a barrel, while US West Texas Intermediate (WTI) crude slipped 4 cents, or 0.06%, to $72.04 a barrel in early Asian trade. For the week, Brent was set to gain around 6%, while WTI was on track to rise about 5%, reflecting continued concerns over global energy supplies despite Friday's modest decline.

The market found support after a US official said technical talks between Washington and Tehran were continuing despite two days of renewed military exchanges. According to Reuters, speaking on condition of anonymity, the official said the US remained committed to finding a diplomatic solution with Iran, signalling that negotiations had not been derailed by the latest escalation.

The renewed violence has become the biggest test yet for a 60-day interim peace agreement reached between the two countries. The ceasefire came under strain after the US launched fresh strikes on Iranian targets in retaliation for what it said were attacks by Tehran on commercial vessels transiting the Strait of Hormuz. Iran responded by launching attacks on US military infrastructure in Gulf states over the past two nights.

The escalation coincided with Iran's funeral ceremonies for former Supreme Leader Ayatollah Ali Khamenei, who was killed on the opening day of the US-Israeli military campaign. The ceremonies delayed planned negotiations between the two countries this week.

The latest hostilities have also postponed the full reopening of the Strait of Hormuz, through which nearly 20% of the world's daily oil and gas supplies moved before the conflict. Transit through the strategic waterway has slowed amid heightened security concerns, although traders have become less convinced that exports will face prolonged disruptions.

Complicating the diplomatic process, the US Treasury revoked a waiver that had allowed the global sale of Iranian oil, marking another setback for the interim peace deal. Washington has accused Tehran of violating the ceasefire by attacking vessels in the Strait of Hormuz, describing the incidents as acts of terrorism. Iran, in turn, has accused the US of interfering in its control of the vital shipping lane.

Negotiators also remain divided over several key issues, including shipping tolls through Hormuz, the release of frozen Iranian assets and Tehran's nuclear programme, limiting progress towards a broader peace agreement.

President Donald Trump had said on Wednesday that he did not believe the war would restart and that "anything that happens is going to be over very quickly," even though he also suggested the ceasefire was effectively "over."