Oil prices fell over 5% for the week, with West Texas Intermediate futures closing at $84.67 per barrel and Brent crude settling at $90.12, both down more than 1% on Friday. This decline was driven by hopes that the conflict in the Middle East would de-escalate following news of a potential deal between the US and Iran. The temporary ceasefire, established on June 17, had largely broken down, but new talks have brought renewed optimism.
President Trump announced on Saturday that he would cancel planned attacks on Iran, citing a request from Iran and other Middle Eastern countries to allow for a deal to be rapidly made. This proposed agreement, he stated, would include the "Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat." The Strait of Hormuz is a crucial waterway through which about a fifth of the world's oil supplies moved before the war, and its closure has significantly contributed to rising energy prices.
However, there is some skepticism from the Iranian side. Iran's Foreign Ministry spokesperson Esmail Baghaei stated that the Strait of Hormuz "will in no way" be reopened and that negotiations were focused on a new shipping route, not the reopening of the strait itself. Another Iranian news agency, Fars, indicated that the strait would remain closed as long as the US maintains its "hostile actions." Despite these conflicting statements, the mere discussion of a deal provided a boost to market sentiment.
The potential agreement also aims to address Iran's nuclear program. Trump emphasized that the deal would include an "end to Iran's nuclear threat." This aligns with his stated goal of preventing Iran from acquiring nuclear weapons, even if it meant higher fuel costs. Israeli officials, including Energy Minister Eli Cohen, confirmed close coordination with the US on regional security and intelligence matters, underscoring the broader implications of any deal.
