Financial markets reacted cautiously on Friday as negotiators signaled a potential breakthrough in US-Iran talks aimed at ending the war. A new memorandum of understanding appeared close to approval, though sticking points remained over critical provisions including control of the Strait of Hormuz. The shipping chokepoint handles roughly one-fifth of global oil trade, making its status central to any agreement.

Crude prices fluctuated within narrow ranges amid the uncertainty. Brent crude traded between $92 and $93 a barrel for August delivery, while West Texas Intermediate slipped to just under $89 a barrel for July. The cautious trading reflected investor wariness about whether diplomatic progress could withstand recent volatility, including sporadic exchanges between US and Iranian forces earlier in the week.

Asian markets showed stronger gains, with South Korea's KOSPI jumping 3.5 percent. Japanese and Taiwanese indices rose more than 2 percent each, buoyed by hopes that any de-escalation could ease energy costs. European stocks edged higher as well, with the Stoxx 600 tracking modest gains. US S&P 500 futures pointed to a small advance when markets reopened.

Gasoline prices continued their retreat at the pump, falling four cents to $4.39 a gallon nationwide. This represents a 47 percent increase from pre-war levels, though the recent decline suggests some easing in energy market pressures. Diesel prices dropped to $5.52 a gallon, also up 47 percent since the conflict began. The divergent movements highlight how energy markets respond differently to geopolitical developments.

Any lasting peace agreement would likely require resolution on the Strait of Hormuz before markets fully embrace the optimism.