Oil prices fell to two-month lows on Friday after US President Donald Trump said he was cancelling more airstrikes on Iran because Tehran had approved an agreement that would be signed “soon, very soon, maybe over the weekend in Europe”. The Strait of Hormuz would reopen “as soon as we sign” the documents of the “great settlement”, Trump said, adding that “the whole Middle East is happy”.
Iran’s foreign ministry later said Tehran had not made a final decision on an agreement and would not compromise on its “red lines”, state-run media reported. A spokesperson said a large part of the text had been finalised but the US had repeatedly changed its positions during the talks.
Israel, however, said it was “not a party to” what Prime Minister Benjamin Netanyahu’s office described as a memorandum of understanding between the US and Iran. The final agreement would reportedly include removal of Iran’s 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 Tehran.
Brent crude dropped 1.5% to $89.08 a barrel, and US West Texas Intermediate fell 1.9% to $86.08, building on overnight losses. Asian stocks rallied, with South Korea’s Kospi surging 7.4% and Japan’s Nikkei up 2.7%. The new agreement reportedly provides a timeline for demining the Hormuz strait, during which the US naval blockade would continue, but contains no concrete agreements on releasing frozen Iranian assets.
Trump had earlier threatened to seize Iran’s Kharg Island “in the not too distant future” but later said the seizure would be off the table “if we sign this agreement”. The island hosts a terminal through which Iran exports most of its oil. US forces shot down two Iranian drones as Tehran appeared to attempt to strike commercial ships in the strait, an official said. Three Indian seafarers were killed in US strikes on oil tankers earlier in the week, prompting a “strong protest” from India.
The World Bank revised its global growth assessment down amid the Iran war to levels not seen since the Covid pandemic, warning of expanding economic impacts, especially on developing nations. In Lebanon, Israeli raids continued, with a hospital in Tyre wounded 10 staff.
