Oil Prices Slide After Trump Signals Near Iran Deal
In Asian trade on Friday, Brent crude futures for August delivery fell 1.5% to $89.05 per barrel, while West Texas Intermediate (WTI) futures slipped 1.6% to $86.34 per barrel. Both benchmarks had declined nearly 3% on Thursday and were on track for weekly losses exceeding 4% as market participants unwound the geopolitical risk premium that had accumulated during recent hostilities between the United States and Iran.
U.S. government data released earlier in the week showed a drawdown of 7.2 million barrels in crude inventories, far surpassing expectations and marking the seventh consecutive weekly decline in U.S. crude stocks. The inventory contraction signaled robust demand in the world’s largest oil consumer.
President Donald Trump announced that he had cancelled planned military strikes against Iran and indicated that diplomatic discussions had reached the highest levels of leadership. He said a peace agreement could be signed as early as the upcoming weekend, which would reopen the Strait of Hormuz to shipping. This statement represented a marked shift from earlier threats of military action that had heightened fears of supply disruptions from the Gulf region.
Iran responded that it had not reached a final conclusion on the negotiations, leaving the outcome uncertain. Traders remained cautious, noting that any setback could quickly revive concerns over supply disruptions.
Overall, the combination of a significant inventory draw, the cancellation of planned strikes, and the prospect of a diplomatic settlement led to a reduction in the geopolitical risk premium, driving oil prices lower despite lingering uncertainty.