Oil Prices Fall as Trump Signals Iran Deal, Reducing Supply Risk Concerns

Global oil prices extended their decline in Asian trading on Friday and were on track for a weekly loss after U.S. President Donald Trump announced that he had canceled planned military strikes against Iran, citing progress toward a potential diplomatic agreement.

Brent crude futures for August delivery dropped 1.5% to $89.05 per barrel, while West Texas Intermediate (WTI) crude futures fell 1.6% to $86.34 per barrel. The decline followed a sharp selloff on Thursday, when both oil benchmarks lost nearly 3% as traders reduced the geopolitical risk premium that had supported prices during recent tensions in the Middle East.

Market sentiment improved after Trump stated that negotiations with Iran had reached the highest levels of leadership and that a deal could be finalized soon. According to the U.S. president, Washington and Tehran may sign a peace agreement as early as this weekend, potentially allowing the Strait of Hormuz to fully reopen to international shipping.

The Strait of Hormuz is a critical global oil transit route, and fears of disruptions in the region had previously driven crude oil prices higher. Trump's latest comments marked a significant shift from earlier warnings of possible military action, easing concerns about supply interruptions from one of the world's most important energy-producing regions.

Despite the decline in oil prices, investors remain cautious. Iranian officials indicated that discussions are still ongoing and that no final decision has been reached. Any breakdown in negotiations could quickly reignite concerns over global oil supplies and trigger renewed volatility in energy markets.

Limiting the downside for crude prices, recent U.S. government data revealed a larger-than-expected drawdown in crude oil inventories. U.S. stockpiles fell by 7.2 million barrels, significantly exceeding market forecasts and highlighting strong fuel demand in the world's largest oil-consuming nation.

The latest inventory decline marked the seventh consecutive weekly drop in U.S. crude stocks, providing fundamental support for the oil market. However, the sharp losses recorded on Thursday outweighed earlier gains driven by geopolitical tensions, leaving both Brent crude and WTI crude set for a weekly decline.

Investors will continue monitoring developments in U.S.-Iran negotiations, global oil supply conditions, and energy demand trends for further direction in the crude oil market.