Oil markets tumbled for a second consecutive session on Friday as traders rushed to price out geopolitical risk premium following President Trump’s abrupt decision to stand down from planned military strikes on Iran.
Brent crude shed $2.11, or 2.3%, to trade at $88.27 a barrel by 06:40 GMT, while WTI fell $1.90, or 2.2%, to $85.81, extending Thursday’s sell-off and marking one of the sharpest two-day pullbacks in recent weeks.
The retreat came after Trump revealed on Thursday that strikes against Iran had been called off, citing progress in back-channel negotiations and floating the possibility of a peace agreement that could reopen the Strait of Hormuz to normal shipping traffic as early as this weekend.
Tehran, for its part, struck a more cautious tone, with officials saying no final decision had been reached.
Analysts described the market’s reaction as unusually swift, though many cautioned against reading too much into it. IG’s Tony Sycamore noted the speed of the move but flagged that the broader risk balance remains tilted toward higher prices so long as crude holds support in the low $80s, suggesting the dip may prove temporary rather than the start of a sustained decline.
The de-escalation followed a volatile week marked by tit-for-tat military exchanges and Iran’s announcement on Thursday that it was formally closing the Strait of Hormuz, a chokepoint already operating under severe restrictions, through which roughly a fifth of the world’s oil and LNG flows.
Tehran warned it would fire on vessels attempting passage without authorization, and state media reported Friday that Iranian forces had already blocked one tanker from transiting without coordination. The U.S. military, however, maintained that commercial shipping through the strait was continuing.
That contradiction underscores the fragility analysts are warning about. ING cautioned that the apparent ceasefire extension is far from guaranteed and that any stalling in parallel nuclear negotiations could unravel the truce quickly.
The bank set a critical timeline marker for late July, the point at which, absent a resumption of normal oil flows, tightening inventories and the seasonal demand pickup could send prices surging toward $120-130 per barrel.
Adding to the complex picture, OPEC on Thursday cut its 2026 global oil demand growth forecast for the second consecutive month, lowering its estimate to 970,000 bpd from 1.17 million bpd.
The group struck a more optimistic note on the longer-term outlook, however, raising its 2027 demand growth forecast to 1.73 million bpd, an upward revision of 190,000 bpd, implying it expects any near-term softness in consumption to be a temporary lull rather than a structural shift.
Taken together, Friday’s price action reflects a market caught between immediate relief over reduced war risk and lingering unease about how durable that relief will prove, with the Strait of Hormuz remaining the key flashpoint to watch in the weeks ahead.
WHAT YOU SHOULD KNOW
Oil’s 2% drop reflects relief over Trump’s halted Iran strikes and hopes of a Hormuz reopening, but this is fragile, not resolved. Iran hasn’t confirmed a deal and has already blocked at least one tanker, and analysts warn the ceasefire could collapse if nuclear talks stall.
If oil flows through the Strait don’t normalize soon, prices could spike toward $120-130 by late July. Today’s dip is a pause, not a turning point; the Strait of Hormuz remains the critical variable to watch.
