Oil Prices Fall as Trump Halts Iran Strikes, Easing Tensions

Global oil prices experienced a significant decline, extending previous losses as U.S. President Donald Trump called off planned military strikes against Iran. This decision eased immediate concerns about a potential escalation of hostilities in the Strait of Hormuz, following a series of tit-for-tat attacks earlier in the week.

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While this could, of course, be yet another false dawn, the market's reaction has been both swift and decisive.

On Friday, Brent crude futures fell by $1.83, or 2%, settling at $88.55 a barrel. West Texas Intermediate (WTI) crude saw a similar drop, decreasing by $1.60, or 1.8%, to $86.11. Trump had previously threatened to strike Iran "very hard" but announced the cancellation Thursday, citing progress in discussions that could lead to a peace deal and reopen the vital Strait of Hormuz to shipping.

However, Iran's semi-official Fars news agency reported that Tehran had not yet approved any agreement text. Market analysts remain cautious. "While this could, of course, be yet another false dawn, the market's reaction has been both swift and decisive," said IG market analyst Tony Sycamore. He noted that while prices are falling, they could still rise significantly if they hold above the low $80s.

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We would be cautious about assuming that the extension of the ceasefire is a done deal. Even if it is, it could be fragile. And clearly, if nuclear talks do not progress, it could very easily fall apart.

The situation remains tense, with Iran having previously announced a "closure" of the Strait of Hormuz, a critical waterway for global oil and LNG shipments. Iranian forces reportedly prevented a tanker from transiting the strait without coordination, although the U.S. military stated commercial ships continued to pass through. Analysts at ING warned that a ceasefire could be fragile and dependent on progress in nuclear talks, suggesting a potential market inflection point in late July if oil flows do not resume.

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We believe the market reaches an inflection point in late July if we do not see oil flows resuming before then. This is when inventory levels and seasonally stronger demand push prices significantly higher towards $120-130 per barrel.