Crude prices plunge as Trump cancels planned Iran strikes
Oil prices fell nearly 3% on Friday to their lowest in nearly two months after U.S. President Donald Trump cancelled new strikes on Iran, reducing fears of an escalation of hostilities following tit-for-tat attacks earlier in the week.
Brent futures were down $2.27, or 2.5%, at $88.11 a barrel by 1322 GMT, while U.S. West Texas Intermediate (WTI) crude dropped $2.47, or 2.8%, to $85.24. Both contracts were at their lowest since April 17.
A memorandum between the United States and Iran to halt the war in the Gulf could be signed as soon as Sunday, a Western source told Reuters on Friday, with Geneva emerging as the likeliest venue.
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Iran’s Fars news agency, however, citing a source close to the negotiation, denied that an agreement could be signed on Sunday in Geneva.
Trump called off threatened strikes on Thursday, while Iran’s Mehr news agency reported that final negotiations on the memorandum would focus on nuclear and economic issues but would exclude discussions about Iran’s missile programme.
Iran’s IRNA news agency meanwhile said nuclear talks would take place within a 60-day period after the memorandum was signed.
“Headlines are driving the market once again, as confidence grows that an eventual deal will be struck and the Strait reopens,” said PVM Oil Associates analyst Tamas Varga.
The caveat, however, was that global and regional oil stocks were still low and could drift lower, even with a deal, as it would take time to ensure uninterrupted oil flows, he added.
On Thursday, Iran announced a complete closure of the Strait of Hormuz, through which vessel traffic was already severely limited, saying it would fire on any ship trying to pass. The strait normally carries a fifth of global oil and liquefied natural gas shipments.
The U.S. military said on social media that commercial ships continued to transit the waterway.
“We believe the market reaches an inflection point in late July if we do not see oil flows resuming before then,” ING analysts said in a note. “This is when inventory levels and seasonally stronger demand push prices significantly higher towards $120-130 per barrel.”
Goldman Sachs lowered its 2027 average Brent forecast to $80 a barrel on higher supply and lower demand, but expects prices to exceed the 2025 average on stockpiling of OECD commercial oil stocks and a security premium for disruptions.
The Organization of the Petroleum Exporting Countries lowered its forecast for 2026 world oil demand growth to 970,000 barrels per day on Thursday from a previous 1.17 million bpd – its second straight downward revision.
The producer group also said consumption would rebound later, raising its demand growth forecast for 2027. It expects 2027 oil demand to rise by 1.73 million bpd, up 190,000 bpd from its previous forecast.
Reporting by Sudarshan Varadhan and Emily Chow, Ahmad Ghaddar in London; Editing by Louise Heavens and Kevin Liffey
This article was first reported by Reuters
