Oil prices fell to two-month lows on Thursday after US President Donald Trump said he had cancelled airstrikes on Iran because Tehran had approved an agreement with the United States. The proposed deal, which Trump said would be signed “soon, very soon, maybe over the weekend in Europe”, includes the reopening of the Strait of Hormuz. However, Iran later stated it had not made a final decision on the matter and would not compromise on its “red lines”.
US West Texas Intermediate crude futures fell 1.9% to $86.08 a barrel, adding to a 2.6% drop overnight, while Brent crude dropped 1.5% to $89.08, following a near 3% decline the previous day. Asian stock markets rallied on the news, with South Korea’s Kospi surging 7.4% and Japan’s Nikkei rising 2.7%.
Trump claimed the agreement’s “final points” had been approved by the US, Israel, Saudi Arabia, the UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, Egypt, and others. However, Israel said it was “not a party to” what it described as an emerging memorandum of understanding between the US and Iran. Iran’s foreign ministry reported that a large part of the text had been finalised but that the US had repeatedly changed its positions during the talks.
The reported deal includes a timeline for demining the Strait of Hormuz—during which the US naval blockade would continue—and mechanisms for further nuclear talks and the release of frozen Iranian assets, but lacks concrete agreements on how these steps will be implemented. Earlier on Thursday, Trump had threatened to seize Iran’s Kharg Island, but later said the seizure would be off the table “if we sign this agreement”. Iranian forces prevented a tanker from transiting the strait without coordination, and US forces shot down two Iranian one-way attack drones amid attempts to strike commercial ships.
In a separate development, a strike in Lebanon wounded 10 hospital staff in Tyre as Israeli raids continued in the south. The Indian government voiced a “strong protest” after three Indian seafarers were killed in US military strikes against oil tankers in the Strait of Hormuz on Wednesday. The World Bank revised its global growth forecast downward amid the Iran conflict, warning of severe economic impacts, particularly for developing nations.
