Oil prices edged lower as investors assessed signs that the Gulf states and Iran are moving closer to an agreement to reopen the Strait of Hormuz under a temporary arrangement designed to pave the way for broader negotiations aimed at ending the regional conflict.
Brent crude futures fell 57 cents, or 0.7%, to $81.92 a barrel, while U.S. West Texas Intermediate (WTI) crude slipped 33 cents, or 0.4%, to $76.96 a barrel.
Crude futures had climbed more than $3 on Thursday after Iran reviewed a proposal to ban U.S. and Israeli vessels from transiting the Strait of Hormuz, a route that handled around one-fifth of global oil and liquefied natural gas shipments before the war began in late February.
Prices had fallen earlier in the week as prospects for a diplomatic breakthrough improved, with both benchmarks on track for weekly losses of around 9%.
However, analysts said this week's developments suggest tensions between Iran and the United States remain far from resolved.
Iran is seeking to impose transit fees of between 5% and 7% of cargo values on vessels using the strait, according to a senior Iranian official. Oman, meanwhile, is negotiating a levy of around 3%, while Washington opposes the introduction of any charges.
Four industry sources said the proposed arrangement would be difficult to implement because of U.S. sanctions and insurance restrictions on any payments.
"The current structure of the proposed Iran-Oman agreement, and the level of influence it would give Iran, is not something that President Donald Trump could politically accept," said Bjarne Schieldrop of SEB Research. "He would face significant political backlash at home if he did."
