Oil prices were little changed during Friday's Asian trade after posting losses in the previous session, as investors weighed fading prospects for a near-term peace agreement between the United States and Iran against ongoing concerns over global oil supplies.
By 2:50 pm AEST (4:50 am GMT), Brent crude futures were up 34 cents, or 0.4%, at US$95.37 a barrel, while U.S. West Texas Intermediate crude rose 9 cents, or 0.1%, to US$93.13 a barrel.
In the previous session, Brent and WTI crude settled 2.8% and 3.1% lower, respectively.
Despite the modest gains, both benchmarks remained on track to record their first weekly advance in three weeks. WTI was up more than 6% for the week as tensions in the Middle East continued to support risk premiums in energy markets.
The gains have been driven by renewed fighting across the region and uncertainty surrounding negotiations aimed at ending the conflict involving the United States, Israel and Iran.
Market participants have also remained focused on disruptions to shipping through the Strait of Hormuz, a critical energy transit route through which roughly one-fifth of global oil supplies normally pass. Traffic through the waterway has remained limited since hostilities intensified.
Diplomatic efforts suffered a setback on Thursday after Hezbollah leader Naim Qassem rejected a U.S.-brokered ceasefire agreement between Israel and the Lebanese government. The proposal had been viewed as a key step towards broader regional de-escalation.
Iran has made a ceasefire in Lebanon a condition for any future peace agreement with Washington, raising doubts about the prospects for a comprehensive settlement following Hezbollah's rejection of the proposal.
U.S. President Donald Trump sought to strike an optimistic tone on Thursday, saying he believed progress was being made between Israel and Lebanon and adding that Lebanon deserved peace.
However, with fighting continuing across several fronts and negotiations still facing significant obstacles, energy traders remain cautious about the likelihood of a swift diplomatic resolution.
