Oil markets eased in Asian trading on Friday, with both Brent and West Texas Intermediate futures moving lower as the market prepared for a potential de-escalation in the Middle East and digestion of recent gains. Traders were also responding to profit-taking and a firmer U.S. dollar, leaving crude poised for a weekly decline.
Brent futures for April held at $67.58 a barrel, while WTI crude rose 0.1% to $63.09 a barrel by 21:13 ET (02:13 GMT). Those price levels came as attention centered on planned talks between U.S. and Iranian officials in Oman, and on the extent to which those discussions might reduce the geopolitical risk premium priced into crude.
U.S. and Iranian delegations were due to meet in Oman later on Friday amid heightened military tensions in the region. The heightened tensions follow a U.S. deployment of at least two naval fleets to the area. Market participants were hoping that the diplomacy could help lower the risk of a broader conflict, a dynamic that encouraged some traders to trim the premium they had built into oil prices earlier in the month.
However, the two sides were reported to be at odds over what the talks should cover. Iran rejected U.S. requests to include its missile arsenal on the agenda, saying the discussions would be limited to Tehran's nuclear activities. Iran's role in global oil flows and its proximity to the Strait of Hormuz - a key shipping channel for crude - means any diplomatic or military developments there can quickly affect risk perceptions in energy markets.
For the week, Brent and WTI futures were down in the range of 2.5% to 4%, as investors took profits following an extended rally. That earlier uptrend had seen crude supported by expectations of tighter supplies after severe weather in the United States disrupted production, as well as by production outages in Kazakhstan and elevated concerns about a possible escalation of conflict in the Middle East.
Those supply-side drivers had lifted prices over recent weeks, but some of that advance reversed as traders realized gains and as broader commodity markets came under pressure. A stronger dollar contributed to the downward pressure on oil prices; the U.S. currency was headed for its strongest week since October after markets judged Kevin Warsh, President Donald Trump's nominee for the next Federal Reserve chair, to be a less dovish choice.
The combination of reduced geopolitical premium, profit-taking after six consecutive weeks of gains, and currency strength left crude trading lower on the week. Market participants continue to monitor the Oman talks closely, as any change in perceived military or diplomatic risk could quickly alter where traders set risk premia for crude.
Market context: Prices earlier received support from anticipated supply constraints linked to extreme U.S. weather, outages in Kazakhstan, and concerns over broader Middle East tensions. This support was countered later by profit-taking and a stronger dollar, which pressured commodities broadly.