Oil prices extended their decline on Friday after Donald Trump called off planned military strikes against Iran, cooling fears of an escalation that had gripped energy markets following a week of cross-border attacks.
By 00:42 GMT, Brent crude futures were down $1.21, or 1.3%, to $89.17 a barrel. US West Texas Intermediate fell $1.23, or 1.4%, to $86.48. On a weekly basis, Brent has shed 4.2% and WTI 4.4%.
Trump, who had threatened to strike Iran “with great force,” said Thursday that talks with Tehran had made progress — but Iran’s semi-official Fars News Agency reported that the country had not agreed to the text of any deal. The gap between those two accounts left markets cautious even as prices fell.
Iran’s announcement on Wednesday that it was closing the Strait of Hormuz, with a warning that any vessel attempting to pass could be fired on, had driven prices sharply higher earlier in the week. The strait typically carries around a fifth of global oil and LNG shipments. The US military said on social media that commercial vessels had continued to transit the waterway.
Tony Sycamore, market analyst at IG, described the market’s response to Trump’s reversal as “fast and decisive,” while acknowledging it “could, of course, just be another false dawn.” He added that even with prices lower, “as long as the price can remain above the $80 level, the risks are heavily skewed to the upside.”
