Oil prices fell to two-month lows on Friday after US President Donald Trump said he was cancelling further airstrikes on Iran, citing an emerging agreement with Tehran. US West Texas Intermediate crude dropped 1.9% to $86.08 a barrel, while Brent crude fell 1.5% to $89.08, extending sharp overnight declines.
Trump said Iran had approved an agreement with the US that would be signed “soon, very soon, maybe over the weekend in Europe”. He claimed the Strait of Hormuz would reopen once the “great settlement” documents were signed. However, Iran’s foreign ministry later stated that Tehran had not made a final decision on the deal and would not compromise on its “red lines”.
Israel said it was not a party to the emerging memorandum of understanding between the US and Iran. Prime Minister Benjamin Netanyahu’s office said the final agreement would require the removal of Iran’s enriched material, dismantling of enrichment infrastructure, limits on missile production, and an end to Iran’s support for regional proxies – measures that have historically been red lines for Tehran.
Asian stocks rallied on the news, with South Korea’s Kospi surging 7.4% and Japan’s Nikkei up 2.7%. The World Bank revised its global growth assessment down amid the Iran war, warning of expanding economic impacts on developing nations.
Earlier on Friday, Iranian forces prevented a tanker from transiting the Strait of Hormuz without coordination, state media reported. US forces later shot down two Iranian one-way attack drones attempting to strike commercial ships in the strait, according to a US official. Traffic flow through the strait continued.
