The prospect of an international waterway reopening under the governance of Iran and Oman continued to sway oil traders on Friday, contributing to another dip in prices and a weekly loss of roughly 5 percent.

As of 1654 GMT, Brent was down 38 cents at $89.32 per barrel, while West Texas Intermediate fell 36 cents to $83.17.

The Strait of Hormuz is the world's most important oil transit chokepoint, with roughly a fifth of global petroleum liquids consumption normally passing through it, so even partial changes in its status move benchmarks like Brent and WTI. Commenting on a reported increase in transit flows through the Strait, Janiv Shah, analyst at Rystad Energy, said: "The market has been surprised by the additional flow, Iran-Oman shipping corridor and the U.S. mine clearance claims."

"The weekly decline would likely be due to the available volume that is able to exit the Strait and the pace of ramp-up in flows: that would allow Asian refiners to pull and consume," Shah added.

The optimism surrounding the Iran/Oman proposal to reopen the Hormuz was puzzling, given that Middle East nations and Washington have repeatedly insisted that international waters must remain free of such governance. Optimistic traders appeared to gloss over Iran's demands that full transit normalization was conditional on sanctions relief, an end to the U.S. blockade, and an end to Israel's operations in Gaza, Lebanon, and Syria. Tehran issued its list of conditions after a Qatari emissary pressed the Islamic republic to respect freedom of navigation. Whether those demands are met — or whether transit flows keep ramping up without them — is likely to determine whether the week's discount in oil prices holds.

Meanwhile, further cracks in Iran's resilience became evident on Friday when its supreme leader called for political unity, warned government officials against rhetoric that could deepen divisions or undermine public confidence, and urged officials to project the republic's "power and strength."

In other oil news on Friday, Baltic Exchange data showed that earnings on the benchmark Saudi Arabia-to-China supertanker route surged to a record $647,000 per day — ten times the rate of a year ago. This came as Persian producers increased crude shipments through the Hormuz. The Baltic Exchange, whose assessments are the shipping industry's standard freight benchmarks, recorded the spike as freight costs now feed directly into delivered crude costs for buyers.

Julianne Geiger, market analyst at Oilprice.com, noted that this "in theory, should ease the oil supply crunch; instead, it has created another one: ships." Geiger was referring to the fact that relatively few tanker owners are willing to transit the Hormuz, leaving exporters to compete for those who will take the risk: "The result is an extraordinary premium for anyone willing to make the trip."