Global oil prices tumbled in early Asian trade on Friday, erasing some of the week’s gains, as fresh signs of de-escalation in the Middle East sparked investor optimism that the region’s latest oil shock may be nearing its end.
Brent crude futures, the global benchmark, dropped 61 cents, or 0.61 percent, to $98.78 a barrel by 07:07 GMT. U.S. West Texas Intermediate crude fell 89 cents, or 0.94 percent, to $93.80 a barrel, trimming the previous session’s rebound but still trading comfortably below the psychologically important $100 level that had dominated headlines for weeks.
The sell-off was driven by two headline developments. First, a 10-day ceasefire between Lebanon and Israel took effect, offering the most tangible pause in fighting since Israel’s campaign there became a major stumbling block to broader peace efforts.
Second, U.S. President Donald Trump told reporters outside the White House on Thursday that American and Iranian negotiators could sit down for talks as early as this weekend — and that Tehran had made a significant concession on the nuclear issue.
“We’re going to see what happens. But I think we’re very close to making a deal with Iran,” Trump said, according to a pool report. He added that Iranian officials had offered to forgo nuclear weapons for more than 20 years, addressing what he described as a “key sticking point” in efforts to end the conflict.
The Iran war, which Washington and its Israeli ally launched in late February, has already exacted a heavy toll on global energy markets. For the past seven weeks, the Strait of Hormuz — the narrow chokepoint through which roughly one-fifth of the world’s daily oil supply normally flows — has been closed, disrupting an estimated 13 million barrels per day, according to analysts at ING.
That closure sent prices rocketing 50 percent in March alone in one of the sharpest monthly surges on record. Only in the past week have futures slipped back below $100 and settled into the low $90s, reflecting tentative hopes that diplomacy might finally prevail.
Yet negotiators on both sides have quietly scaled back their ambitions. Two Iranian sources told Reuters on Thursday that Washington and Tehran are no longer chasing a comprehensive peace treaty. Instead, they are working toward a temporary memorandum of understanding aimed simply at preventing an immediate return to open conflict.
The shift in expectations underscores the fragility of the moment. While the Lebanon ceasefire and Trump’s upbeat comments have lifted market sentiment, analysts caution that any agreement remains provisional. “A short-term memo is better than nothing, but it doesn’t restore the 13 million barrels a day that are currently offline,” one senior oil trader in Singapore noted. “The market is pricing in hope, not certainty.”
Still, the relief was palpable on trading floors. Energy shares edged lower in early European dealing, while the broader equity markets breathed easier, betting that a swift reopening of the Strait would ease inflationary pressures on everything from gasoline to plastics.
For now, the focus remains on the weekend’s potential U.S.-Iran meeting. If Trump’s optimism proves well-founded, the oil market’s month-long roller-coaster could be headed for a sharp correction. If not, traders warned, the $100 handle could be reclaimed as quickly as it was lost.
The coming 48 hours, it seems, will determine whether this week’s tentative calm marks the beginning of the end — or merely a pause before the next surge.
WHAT YOU SHOULD KNOW
Oil prices fell sharply in early trade today as optimism grows that the Middle East conflict may be winding down.
A 10-day ceasefire between Lebanon and Israel taking effect, combined with President Trump’s statement that the U.S. and Iran could hold talks this weekend, with Tehran offering to forgo nuclear weapons for over 20 years.
This has raised hopes for reopening the Strait of Hormuz — which has been closed for seven weeks, disrupting 13 million barrels per day — potentially easing the recent oil price surge that saw Brent briefly spike 50% in March.
Markets are now pricing in de-escalation rather than prolonged disruption.
