Oil Prices Slide as U.S. Eyes Iranian Supply Relief Amid Middle East Tensions

Oil prices dropped sharply in early Friday trading, extending the previous session's losses after U.S. officials signaled that Washington could soon ease sanctions on Iranian crude oil already at sea. The potential release of approximately 140 million barrels of supply helped cool a market that had been running white-hot amid escalating regional conflict.

Brent crude futures declined 2% to $106.48 per barrel, while West Texas Intermediate fell 2.1% to $93.56 per barrel as of 20:06 ET. Despite Friday's pullback, Brent remained on track for a weekly gain of around 3.2%, whereas WTI was set to close the week roughly 3.3% lower. Brent had surged as high as $119 per barrel on Thursday before reversing course following remarks by U.S. Treasury Secretary Scott Bessent, who suggested the sanction relief could meaningfully boost available supply.

The broader backdrop remains deeply unsettled. Crude oil has climbed more than 40% in 2026 as the ongoing U.S.-Israel conflict with Iran continues to disrupt global energy markets. Israeli Prime Minister Benjamin Netanyahu confirmed that Israel acted unilaterally in striking South Pars, the world's largest natural gas field, while asserting that Iran no longer possesses the capacity to enrich uranium or produce ballistic missiles.

Iran responded aggressively, with Tehran launching retaliatory strikes on multiple energy facilities across the Middle East on Thursday. Iran's Revolutionary Guard gave no indication of standing down, and the Strait of Hormuz — a critical chokepoint for global oil and gas shipments — remained largely blocked, raising serious supply concerns, particularly for Asian markets.

Washington's reported request for Israel to refrain from further attacks on Iranian energy infrastructure added a measured note of diplomatic caution, offering markets a brief reprieve even as underlying geopolitical risks stay elevated.