Oil prices tumbled below the $90 per barrel mark on Friday, driven by hopes of a potential agreement to restore global crude flows following signs of easing tensions in the Middle East. US President Donald Trump announced that Washington had reached a framework agreement with Iran, declaring, "the war has ended today."
Crude Oil Prices Drop
Around 7 am IST, WTI Crude stood at $86.73, down 0.98 or 1.12%, while Brent Crude was at $89.45, down 0.93 or 1.03%. The decline reflects market optimism over a possible resolution to the conflict.
Trump's Announcement
Speaking during a tele-rally in support of Georgia lieutenant governor Burt Jones, who is contesting the state's gubernatorial election, Trump declared, "I don't know if you heard, but we ended the war with Iran today." The US president further stated that he expects an agreement to be signed "over the next few days," repeating claims he has made several times during the conflict. He also mentioned that the Strait of Hormuz would reopen once a deal is finalized.
Trump, who had earlier threatened to hit Iran "very hard," called off planned strikes on Thursday, citing progress in discussions with Iran. However, Iran's semi-official Fars news agency reported that Tehran had not approved the text of any agreement.
Background of Tensions
This development comes after tensions intensified earlier this week. On Wednesday, Iran announced the closure of the Strait of Hormuz, warning that any vessel attempting to pass through would come under fire. Tehran's months-long blockade of the strait, which normally carries a fifth of global oil and liquefied natural gas shipments, had kept oil prices elevated.
The US military stated on social media that commercial ships continued to transit the waterway, despite Iran's threats.
Impact on Global Markets
The Middle East crisis has continued to keep global crude markets on edge, with prices previously remaining above the $100 per barrel mark compared with pre-conflict levels of $70 per barrel. The conflict, which began on February 28 with joint US and Israeli strikes on Iran, has disrupted energy sentiment globally. Iran's tightening of its control over the Strait of Hormuz, a route carrying around 20% of the world's fuel, has sent ripples across economies worldwide.
Market analysts are closely monitoring the situation, as any further developments could lead to significant price fluctuations.
