Oil prices dropped on Friday after Europe, Japan, and the U.S. united to keep the Strait of Hormuz open, with Washington hinting at lifting Iranian oil sanctions and tapping the SPR again.
The moves sent an unmistakable signal: the worst of the geopolitical shock from Iran’s recent strikes on Gulf oil and gas facilities may be easing, at least for now.
Benchmark Brent crude futures shed $1.36, or 1.3 percent, to settle at $107.29 a barrel in early Asian trade. U.S. West Texas Intermediate fell even harder, dropping $1.92, or 2.0 percent, to $94.22.
Even so, the week told two different stories. Brent was still on track for a nearly 4 percent gain—the direct result of Iran’s attacks that forced production shutdowns across Gulf states. WTI, by contrast, appeared headed for a drop of more than 4 percent, its first weekly decline in five weeks.
Markets were clearly shedding some of the “war premium” that had pushed prices skyward earlier in the week, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“World leaders have started to acknowledge the need for restraint and de-escalation,” she noted. “But markets will remain acutely sensitive to anything that happens at the Hormuz chokepoint.”
The Strait, through which roughly one-fifth of the planet’s oil and liquefied natural gas flows every day, has become the focal point of fears that a wider conflict could choke off global supplies for months. Even if safe passage is negotiated, Sachdeva warned, “reviving logistics fully fledged can take an awfully long time.
Till then, any direct hit on export infrastructure or tanker routes could push prices sharply higher, while sustained diplomatic engagement may cap rallies and accelerate the unwinding of the war premium.”
The diplomatic breakthrough came in a joint statement issued on Thursday by Britain, France, Germany, Italy, the Netherlands, and Japan. After weeks of hesitation, the six nations declared their “readiness to contribute to appropriate efforts to ensure safe passage through the Strait.”
On the U.S. side, Treasury Secretary Scott Bessent left little doubt that Washington is prepared to act aggressively on supply. Speaking to reporters, Bessent said the administration is considering removing sanctions from Iranian oil currently stranded on tankers. This move could quickly add hundreds of thousands of barrels a day to the market. He also left open the possibility of another release from the U.S. Strategic Petroleum Reserve.
President Donald Trump reinforced the de-escalation message, telling reporters he had personally instructed Israeli Prime Minister Benjamin Netanyahu “not to repeat attacks on Iranian energy infrastructure.”
Separately, a bright spot for U.S. domestic supply emerged from the Bakken shale. North Dakota’s crude output is expected to climb this month and in coming months as operators restart wells idled by winter weather and the state’s top regulator eases seasonal restrictions.
The North Dakota Department of Mineral Resources cautioned, however, that the pace will hinge on whether oil prices remain high enough to justify the spending. Many major oil companies have already locked in their 2026 budgets.
Taken together, the developments painted a picture of cautious optimism in trading rooms on Friday morning. Diplomats and policymakers appear determined to prevent the world’s most critical energy artery from closing—and the United States is signaling it will not hesitate to flood the market if needed.
Yet analysts caution that the truce feels fragile. One tanker attack, one missed diplomatic signal, or one more missile exchange could send the war premium roaring back.
For now, though, the message from capitals on both sides of the Atlantic and in Tokyo was unmistakable: the global economy cannot afford a full-blown oil shock. And for the moment at least, markets are listening.
WHAT YOU SHOULD KNOW
Major powers—led by the US, Europe, and Japan—are actively working together to keep the Strait of Hormuz open and prevent a full supply crisis. At the same time, the US signals more barrels (from Iranian cargoes and possibly the SPR) could hit the market soon.
That diplomatic and supply-side push drove Friday’s sharp price drop and began unwinding the war premium—even though Brent still posted a weekly gain after Iran’s earlier strikes.
