Oil futures fell to two-month lows on Friday after Donald Trump said he was cancelling more airstrikes on Iran because an agreement with the US had been approved and would be signed soon. He said the deal could come "soon, very soon, maybe over the weekend in Europe," and added that the strait of Hormuz would open once the documents of the settlement were signed.
The move was immediate and sharp. US West Texas Intermediate crude futures fell 1.9% to $86.08 a barrel, after dropping 2.6% overnight, while Brent slipped 1.5% to $89.08 a barrel after a nearly 3% overnight fall. Asian stocks joined the rally, with South Korea's Kospi surging 7.4% and Japan's Nikkei rising 2.7%, showing how quickly the market was trading the prospect of de-escalation around Iran and the Hormuz strait.
Trump cast the agreement as nearly done, saying its final points had been approved by all parties involved. He named the US, Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, Egypt and others as part of the talks, and said the whole Middle East was happy. The new agreement, as described, would set a timeline for demining the Hormuz strait, keep the US naval blockade in place during that period and discuss further nuclear talks and the release of frozen Iranian assets.
But Tehran did not back that version of events. Iran's foreign ministry said later that no final decision had been made and that it would not compromise on its red lines, even as a spokesperson said a large part of the text had been finalised and accused the US of repeatedly changing its positions during the talks. Israel also said it was not a party to what Benjamin Netanyahu's office called an emerging memorandum of understanding between the US and Iran.
The gap matters because the market is already reacting as if the crisis is easing while the diplomacy is still unsettled. Early on Friday, Iran forces prevented a tanker from transiting the Hormuz strait without coordination, and later US forces shot down two Iranian one-way attack drones. Trump had earlier said the US would seize Iran's Kharg island in the not too distant future, then said that would be off the table if we sign this agreement. For traders, the next move is not the price alone but whether any signature follows the talk — and whether oil futures keep pricing in relief before a deal is actually real.
