Oil prices slipped early Friday as hopes grew that tensions in the Middle East might ease.
The drop came after a 10-day ceasefire between Israel and Lebanon began, along with signs that the US and Iran could hold talks soon.
Brent crude fell by $1.34 to around $98 a barrel, while US West Texas Intermediate dropped by $1.65 to about $93. These declines pulled prices lower after recent gains.
Markets are reacting to the possibility that the conflict could calm down, especially after weeks of disruption linked to the closure of the Strait of Hormuz.
That shutdown has had a major impact, cutting off a large share of global oil supply. Analysts estimate that around 13 million barrels per day have been affected.
There are also signs of progress in diplomacy. President Donald Trump said the US could be close to a deal with Iran, noting that Tehran may be willing to limit its nuclear program for a long period.
However, expectations are still being managed. Instead of a full agreement, negotiators may aim for a temporary deal to prevent further escalation.
Oil prices had surged sharply in recent months, rising as much as 50% at one point. While they have now dropped below $100, they are still holding in the $90 range.
For now, the market is balancing two forces: the risk of supply disruption and the hope that talks could bring stability back.
