Oil futures fell more than 1% on Friday and were on track for their steepest weekly decline since early April, following reports that the U.S. and Iran had agreed to extend a ceasefire, ‌though it had yet to be finalised.

Brent crude futures for July fell 1.1% or $1.04 to $92.67 a barrel at 0330 GMT. U.S. oil futures fell $1.26, or 1.4%, to $87.64 a barrel. Brent plunged 10.5% this week - the steepest plunge since the week that ended on April 6, while WTI fell 9.2% - the biggest weekly loss since the ⁠week that ended on April 13.

The U.S. and Iran reached an agreement on Thursday to extend a ceasefire and lift restrictions on shipping through the Strait of Hormuz, sources told Reuters, though U.S. President Donald Trump has yet to approve it and Iranian state media said it had not been finalised.

"Consensus remains the conflict is over, and a deal is coming. As long as this narrative holds, crude oil has room to extend its decline toward trendline support in the low $80s," IG analyst Tony Sycamore said.

Prices have been volatile in recent ‌sessions, ⁠swinging by as much as $6 for both benchmarks on conflicting signals over a possible end to the three-month U.S.-Israeli war on Iran and the potential reopening of the Strait of Hormuz - a key conduit for roughly a fifth of the world's oil and liquefied natural gas supplies.

Traffic through the maritime ⁠chokepoint remains a small fraction of the pre-war level. Analysts at ING said a reopening of the strait would offer some immediate relief to the oil market, but a recovery is still uncertain.

"Upstream oil production ⁠has fallen significantly since the war, with producers shutting in production in order to manage storage constraints," ING said in a note. "The recovery in upstream production will be gradual ⁠rather than immediate."

"Refineries in the region need to ramp up output. This will take time, given that some of this infrastructure was targeted in attacks earlier in the conflict."

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Oil prices drop over 1% as US and Iran may extend ceasefire

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