The S&P/ASX200 fell 18.9 points by midday, down 0.2 per cent, to 9,253.1, as the broader All Ordinaries lost 17.7 points, or 0.19 per cent, to 9,434.3.
The local energy sector jumped one per cent as Brent crude spiked to three-day highs of $US83.80, making the local bourse slip after a five-day rally that reset multiple records.
"The (oil) rebound was driven by reports of a proposed Iran-Oman deal that would give Tehran greater control over inbound shipping through the Strait of Hormuz, alongside a preliminary Iranian parliamentary bill that would ban US and Israeli vessels and fine violators up to 20 per cent of cargo value," IG market analyst Tony Sycamore said.
The terms were unlikely to appease the US administration.
"However, it appears to have few good options after Iran threatened late last month to target critical Gulf state infrastructure if the US escalated attacks, on top of reports that the US is running low on critical weapons," Mr Sycamore said.
Local oil and gas giants Woodside and Santos swung higher in-line with energy prices, while refinery operators, coal producers and uranium stocks also advanced.
The dip in sentiment wasn't enough to dampen a recent rally in raw materials stocks, up another 0.9 per cent as gold miners, rare earths producers and battery minerals stocks traded higher.
Gold has so far hung onto its recent gains after breaking out of a six-month downtrend to trade hands at $US4,260 ($A6,060) an ounce.
Mega miners BHP and Rio Tinto and Fortescue crept higher as copper prices ticked higher, while Fortescue dipped as iron ore futures lingered near $US95 a tonne.
Shares in James Hardie rocketed more than four per cent to 12-month highs after a strong first quarter report and a guidance upgrade, driven by strong US sales growth.
The heavyweight financials sector was just that, down 1.1 per cent and the equal-worst performing segment alongside health care, as NAB led the big four banks and Macquarie into the red.
Major insurers were broadly higher, while AMP continued its stellar rebound, more than doubling its share price since March and up almost 10 per cent after Thursday's strong full-year result.
Resmed dragged on the health care sector despite lifting full-year revenue, as the sleep device manufacturer undershot forecasts on gross margin and Americas earnings.
In other company news, Nick Scali shares gained four per cent after the furniture retailer grew its 2026 bottom-line profit by more than a fifth to $75.7 million.
The Australian dollar is buying 70.29 US cents, down from 70.42 US cents on Thursday at 5pm AEST.
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