Oil prices fell to two-month lows on Friday after US President Donald Trump announced he was cancelling further airstrikes on Iran, citing a forthcoming agreement. Trump said the "great settlement" would be signed "soon, very soon, maybe over the weekend in Europe", and that the Strait of Hormuz would reopen upon signing.
Trump earlier threatened to seize Iran's Kharg Island, through which most of Iran's oil is exported, but later said the seizure would be off the table "if we sign this agreement". However, Iran's foreign ministry stated that no final decision had been made, and that Tehran would not compromise on its "red lines". A large part of the text had been finalised, but the US had repeatedly changed positions during talks.
Israel distanced itself from the emerging memorandum of understanding, with Prime Minister Benjamin Netanyahu's office saying it was "not a party to" the deal. The office indicated that any final agreement would require removal of enriched material, dismantling of enrichment infrastructure, limits on missile production, and cessation of Iran's support for regional proxies — measures that have historically been red lines for Iran.
US West Texas Intermediate crude fell 1.9% to $86.08 a barrel, while Brent crude dropped 1.5% to $89.08, following overnight declines. Asian stock markets rallied, with South Korea's Kospi surging 7.4% and Japan's Nikkei rising 2.7%. The reported agreement includes a timeline for demining the Hormuz strait, continued US naval blockade during that period, mechanisms for further nuclear talks, and potential release of frozen Iranian assets, though concrete implementation details remain unclear.
