The South African rand edged up on Friday, as signs emerged of possible peace talks between the US and Iran that could ease Middle East tensions, while domestically focussed traders looked ahead to month-end data for clues on the health of Africa's largest economy.

The rand was at 16.58 against the dollar by 1304 GMT, up about 0.4% from its previous close.

Oil prices slipped in volatile trade on Friday after three Pakistani sources said Iranian Foreign Minister Abbas Araqchi was expected to arrive in Islamabad on Friday night, raising hopes peace talks between Iran and the United States could resume.

The dollar softened but was still headed for its first weekly gain in nearly a month as investors remained nervous about Middle East tensions.

While Lebanon and Israel extended their ceasefire for three weeks ahead of its expiration on Sunday, Iran showed off its control over the Strait of Hormuz by releasing footage of its commandos storming a huge cargo ship, leaving the timing of the reopening of the world's most important shipping corridor uncertain and keeping oil prices elevated.

South Africa is a net importer of energy, leaving it highly exposed to swings in global prices.

"The biggest risk right now is a weekend surprise; geopolitical shocks have a habit of dropping on Saturdays and Sundays, and traders are nervous heading into the close," said Wichard Cilliers, head of market risk at TreasuryONE.

"The situation could unravel quickly if diplomacy fails completely," Cilliers added.

Domestic investor focus next week will be on South Africa's business cycle leading indicator, producer inflation numbers, money supply and private sector credit data, trade balance and budget balance figures.

On the Johannesburg Stock Exchange, the Top-40 index was up 0.6%.

South Africa's benchmark 2035 government bond was weaker, as the yield rose 4 basis points to 8.665%.