By: Economy Middle east

Oil prices moved lower on Friday, driven by growing optimism that the Middle East conflict may be de-escalating, which would significantly enhance supplies. This optimism grew following the implementation of a 10-day ceasefire between Lebanon and Israel, alongside remarks from U.S. President Donald Trump indicating that Washington and Iran could hold talks over the weekend.

As of 4:30 GMT, Brent crude futures dropped $1.22, or 1.23 percent, to $98.17 a barrel. Meanwhile, U.S. West Texas Intermediate crude declined by $1.19, or 1.26 percent, to $93.50 a barrel. Both contracts were down over 3 percent this week.

Crude headed for second consecutive weekly decline

Oil prices are on track for a second consecutive week of losses, as optimism over potential U.S.-Iran peace negotiations grows, particularly after President Donald Trump indicated that a lasting ceasefire agreement could be within reach.

A major obstacle in efforts to end the Iran war, which has shut the Strait of Hormuz for seven weeks and disrupted about one-fifth of global oil supply, centers on nuclear commitments. Trump said Tehran had proposed refraining from possessing nuclear weapons for more than 20 years.

“We’re going to see what happens. But I think ​we’re very close to making a deal with Iran,” Trump told reporters outside ‌the ⁠White House on Thursday

Israel’s campaign in Lebanon has also posed a significant hurdle to securing the peace agreement Trump has been pursuing to bring an end to the war with Iran. On Thursday, Trump announced a 10-day ceasefire between Israel and Lebanon following meetings between officials from both countries in Washington. He added that he plans to invite Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun to the White House for further talks.

The agreement, which appeared to be holding into early Friday, fueled expectations of broader de-escalation across the Middle East.

Oil prices hold in the $90 range

Oil prices surged by 50 percent in March during a record rally and have only recently slipped below the $100-per-barrel level, though they have remained in the $90 range throughout the week.

Oil prices were also pressured by expectations of weaker global demand. Both the International Energy Agency and OPEC cautioned that demand could soften in the months ahead, while ongoing disruption in the Strait of Hormuz is likely to continue constraining supply.

Recent reports indicated that oil flows through the key waterway remain well below pre-war levels, despite it accounting for roughly 20 percent of global oil consumption.