Overview
The market saw Brent crude futures for August delivery decline 1.5% to $89.05 per barrel and West Texas Intermediate (WTI) futures slip 1.6% to $86.34 per barrel during Asian trade on Friday, 20:04 ET (00:04 GMT). Both benchmarks, having fallen nearly 3% on Thursday, were on track for weekly losses exceeding 4% as traders unwound the geopolitical risk premium that had accumulated during recent hostilities.
Geopolitical Context
U.S. President Donald Trump announced that planned military strikes against Iran had been canceled and that discussions between Washington and Tehran had reached the highest leadership levels, with a peace agreement expected as early as the upcoming weekend. Trump indicated the deal could reopen the Strait of Hormuz to shipping, marking a sharp shift from earlier threats that had heightened fears of supply disruptions from the Gulf region. Iran, however, stated it had not reached a final conclusion, leaving the possibility of renewed supply concerns.
Inventory Data
U.S. government data released earlier in the week showed a drawdown of 7.2 million barrels in crude inventories, far surpassing market expectations and signaling robust demand in the world’s largest oil consumer. This decline represented the seventh consecutive weekly reduction in U.S. crude stocks.
Market Sentiment
The combination of Trump’s de‑escalation remarks and the unexpected inventory drawdown limited the extent of the price decline, but traders remained cautious given Iran’s non‑committal stance. Any setback in the negotiations could quickly revive supply‑risk premiums.