TL;DR

Oil resumed its rally on Friday morning, with Brent crude up 3.4% to $106.06 a barrel and WTI up 2.9% to $99.08 after three straight sessions of declines. The trigger: traders losing confidence in a near-term Iran-US peace deal as both sides remain stuck on Tehran's enriched uranium stockpile and Iran's proposed tolling system for the Strait of Hormuz. Risk assets that rallied yesterday on deal optimism are starting the day with a more cautious tone.

What happened

Brent crude futures climbed 3.4% to $106.06 per barrel in early London trading, while West Texas Intermediate futures advanced 2.9% to $99.08. Both contracts had settled roughly 2% lower on Thursday on hopes that a US-Iran agreement was within reach, but the bid has flipped again as fresh comments from Washington and Tehran exposed the gaps still in place.

Two specific friction points are back in focus. First, Iran's Supreme Leader Ayatollah Mojtaba Khamenei issued a directive that near-weapons-grade uranium in the country should not be sent abroad, according to Reuters reporting from Iranian sources. Second, Iran is reportedly in talks with Oman about jointly running a payment system to manage traffic through the Strait of Hormuz, which Washington has rejected outright.

US Secretary of State Marco Rubio said any peace deal would be "unfeasible" if Iran pursues permanent control of shipping tolls through Hormuz, and President Trump said the US has "total control" of the waterway and wants it open and toll-free. Despite all of this, both sides also said the latest US proposal had "narrowed the gaps to some extent," leaving the market with mixed signals rather than a clean direction.

Why oil moved again

The Strait of Hormuz normally carries about 20% of the world's oil and liquefied natural gas, and shipping traffic has been heavily disrupted since US and Israeli-led strikes against Iran began on February 28. Any sign that the strait stays effectively closed, or that Iran tries to impose a tolling regime, keeps a supply premium baked into crude prices.

Yesterday's reversal lower in oil was built on the assumption that a final deal text was close, after the US-Iran deal final draft was reported and the Dow closed at a record. With the uranium and Hormuz tolling issues still unresolved, that assumption is being repriced. Strategists at ING wrote on Friday that this is "not the first time a deal seemed close, only for negotiations to break down," and said a meaningful slice of the market is now more skeptical of the positive signals.

The supply side is also doing some of the work. The International Energy Agency has warned that oil markets could enter a "red zone" this summer if Hormuz does not reopen, since global stockpiles will deplete as travel demand picks up. Both Brent and WTI are still up more than 40% since the conflict started in late February.

Implications for traders

For futures traders, today's move puts CL (WTI) and BZ (Brent) back in focus as headline-driven instruments. Volatility on each new Iran or Rubio comment is likely to stay elevated, and intraday ranges in crude can spill into related products like RBOB gasoline and heating oil. Energy ETFs such as USO and BNO will track the move, but pricing can drift versus spot in fast tape.

For equity traders, the read-through is two-sided. Energy names (XOM, CVX, OXY, and the XLE sector ETF) have been a relative haven during the conflict and tend to catch a bid when crude reclaims ground. On the other side, transports, airlines (UAL, DAL, AAL), and consumer discretionary names that are sensitive to fuel costs face renewed pressure if higher crude sticks. Yesterday's record close on the Dow now sits on a softer foundation if oil holds these gains into the US session.

For crypto traders, the channel is more indirect. Higher oil tends to support the "sticky inflation" narrative, which has been pushing back the expected timing of Fed rate cuts. Bitcoin and ether had been grinding higher this week with BTC near $77,400 and ETH near $2,130 on broad risk-on flows. If equity futures fade and the dollar firms on a hawkish rates reaction, BTC and ETH can lose their bid quickly. The flip side is that any genuine geopolitical scare can also push some flows toward bitcoin as a non-sovereign asset.

Potential positives vs negatives

Upside drivers from here include any concrete movement on a deal text that includes a credible plan to reopen the Strait of Hormuz and a face-saving compromise on Iran's uranium stockpile. That would unwind a meaningful chunk of the current oil risk premium, ease inflation worries, and likely send equities and crypto higher together. A clear, sustained drop in Brent back toward the low $90s would be the cleanest tell.

Downside risks center on talks breaking down outright. A breakdown that triggers fresh military action, a confirmed long-term closure of Hormuz, or formal imposition of an Iran-Oman tolling scheme would push crude higher and tighten financial conditions through energy and inflation channels. That backdrop would weigh on growth-sensitive equities, lift volatility (VIX), and could re-trigger a flight from rate-sensitive risk assets.

What could happen from here

Over the next 24 to 72 hours, three broad scenarios are worth tracking.

Base case: talks remain stuck but do not break. Headlines oscillate between progress and friction, oil stays in a wide range with Brent broadly between $100 and $110, and equities chop in a narrow band into next week's data. Catalyst that confirms this path: more "narrowed gaps" language without a defined deal text. Invalidator: a hard statement from either Trump or Khamenei closing the door on talks.

Upside case: a concrete framework lands that addresses Hormuz access and the uranium stockpile. Brent fades back toward the mid-$90s, equity indices extend their weekly run, and rate-cut odds for the back half of 2026 firm. Confirmer: official US or Iranian readout citing specific terms on uranium and Hormuz, not just sentiment. Invalidator: a fresh kinetic incident in the Gulf.

Downside case: talks collapse or a new escalation event hits the strait. Brent breaks above $110 and grinds toward the May highs, US equity futures crack, and volatility spikes. BTC and ETH likely sell first on liquidity, even if they later attract some safe-haven flow. Confirmer: shipping incident, formal walkout, or new strike. Invalidator: rapid US-Iran call or ceasefire reaffirmation.

What to watch next

For the rest of today's session, traders should watch the next round of statements from Rubio and Iranian officials, any confirmation or denial of the Iran-Oman tolling system, and US CENTCOM updates on naval posture in the Arabian Sea. On the data side, the final May University of Michigan consumer sentiment release is due, which will land into a tape that is already sensitive to inflation expectations.

On price, key technical levels include Brent's $108 area, where multiple recent rallies stalled, and WTI's $100 round-number resistance. A close above either on heavy volume would tilt the next leg toward the downside case. On the downside, a fade back under Brent $102 and WTI $96 would suggest the market still leans toward the base case despite the headline noise.

Sources

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