Oil prices rise as investors doubt breakthrough in US-Iran peace talks

SINGAPORE, May 22 (Reuters) – Oil prices climbed on Friday but were on track for a weekly loss as investors doubted the prospects of a breakthrough in U.S.-Iran peace talks.

Brent crude futures rose $1.66, or 1.6%, to $104.24 a barrel by 0405 GMT, while U.S. West Texas Intermediate futures were up $1.11, or 1.2%, at $97.46.

On a weekly basis, Brent was 4.6% lower and WTI was down 7.6%, with prices fluctuating sharply as expectations for a peace deal shifted.

A senior Iranian source told Reuters gaps with the U.S. have narrowed and U.S. Secretary of State Marco Rubio spoke of “some good signs” in talks, but the countries are still divided on Tehran’s uranium stockpile and controls on the Strait of Hormuz.

“Oil prices would only trend lower when oil market fundamentals materially improve, which looks destined to stretch into 2027,” said David Oxley, chief commodities economist at Capital Economics.

Six weeks since a fragile ceasefire took effect, efforts to end the war have shown little progress, while elevated oil prices have fuelled concern over inflation and the outlook for global economy.

“WTI is likely to remain in a $90–$110 range next week, as it has largely done since late March,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

BMI, a unit of Fitch Solutions, raised its average 2026 dated Brent price forecast to $90 from $81.50 to reflect the supply deficit, time required to repair damaged Middle East energy infrastructure, and the six-to-eight week post-conflict normalisation window.

Around 20% of global energy supplies transited the Strait before the war, which has removed 14 million barrels per day of oil – or 14% of global supply – from the market, including exports from Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.

Full oil flows through the Strait will not return before the first or second quarter of 2027, even if the conflict ended now, the head of the UAE’s state oil firm ADNOC said.

Seven leading OPEC+ oil-producing countries will likely agree to a modest hike to July output when they meet on June 7, four sources said, though delivery for several remains disrupted by the Iran war.

(Reporting by Yuka Obayashi and Sudarshan Varadhan; Editing by Nia Williams, Sonali Paul and Kim Coghill)