Oil Prices Tumble Below $90 as Trump Hints at Iran Peace Deal

Global crude oil prices suffered a steep decline on Friday, with Brent sliding below the $90-per-barrel threshold for the first time in nearly two months, after President Donald Trump abruptly cancelled planned military strikes against Iran and declared that a peace agreement could be signed within days. The president, who earlier in the week had threatened to hit Iran “very hard”, told reporters that negotiations had progressed to an advanced stage and that a memorandum of understanding for a ceasefire would be finalised in Europe, possibly as soon as this weekend, with Vice President JD Vance travelling to oversee the signing. The promise that the Strait of Hormuz — the world’s most critical oil chokepoint — would be “officially opened” after the deal catalysed a rush to unwind the war-risk premium that had been built into crude futures following a series of reciprocal attacks.

Viewed from Washington, the announcement marked a dramatic pivot from military escalation to diplomacy, injecting a wave of relief across financial markets. Yet the picture from Tehran was far more guarded. Iran’s semi-official Fars news agency reported that no final decision had been made on the text of any agreement, and that Tehran had not consented to the terms described by the White House. This dissonance introduced a note of caution, with some traders recalling earlier rounds of talks that had briefly raised hopes before collapsing. Tony Sycamore, a market analyst at IG, captured the mood: “While this may, of course, be just another false hope, the market reaction was swift and decisive.”

In London, Brent futures for August 2026 delivery fell as much as 4.1 per cent during the session, touching an intraday low of $85.82 before settling around $87.25, a level last seen on 17 April. West Texas Intermediate, the US benchmark, slid 3.58 per cent to $84.57. The retreat was not confined to Atlantic basins: Murban crude, the benchmark for Middle Eastern exports to Asia, dropped 3.74 per cent to $83.99 per barrel. Analysts noted that the sell-off was driven by the absence of any immediate physical supply disruption, with traders reassessing the probability of a prolonged closure of the Strait of Hormuz. European natural gas markets also felt the ripple effects, as the Dutch TTF front-month contract fell €3.49 to €46.20 per megawatt hour, reflecting diminished fears of a broader energy crisis.

Before the conflict erupted in late February, Brent was trading around $72 per barrel. Even after Friday’s sharp decline, prices remain roughly $15 above that pre-war baseline. Market strategists caution that only a complete and verifiable end to hostilities — including the full reopening of Hormuz — would be sufficient to drag crude back to those levels. The session’s lows matched the trough reached in mid-April, when a previous diplomatic initiative briefly buoyed markets before unravelling. The gap between Trump’s confident rhetoric and Tehran’s reticence leaves the outlook finely balanced: a signed accord could trigger a further unwinding of the risk premium, but any breakdown would likely send prices spiralling upward once more.