Key Points:
- Oil prices fell on Trump’s optimistic ceasefire comments.
- Trump claimed Iran agreed to concessions, unconfirmed by Tehran.
- The conflict significantly disrupted global oil flows.
- Market volatility has decreased after intense trading.
Oil prices fell after President Donald Trump expressed optimism about reaching a lasting ceasefire agreement between the US and Iran. Brent crude dropped towards $98 a barrel, reducing its weekly gains, while West Texas Intermediate traded near $93.
Trump claimed, without providing evidence, that Tehran had agreed to terms it previously resisted, including reopening the Strait of Hormuz. However, Iran has not publicly confirmed these concessions. Some leaders from Gulf Arab and European nations believe a US-Iran peace deal could take approximately six months to finalize and have suggested extending the current ceasefire to cover this period.
The conflict, now in its seventh week, has significantly impacted the crude market. Hostilities caused an unprecedented supply shock when Tehran halted most traffic through Hormuz, disrupting a fifth of global oil flows. More recently, the US also imposed its own naval blockade, further complicating the situation.
Priyanka Sachdeva, a senior market analyst at Phillip Nova Pte, noted, “The dominant theme now is not escalation, but stabilization.” She added that oil markets are clearly signaling that fear drove the initial rally, diplomacy is causing the current correction, and future uncertainty will lead to continued volatility.
Throughout the conflict, which began in February after US and Israeli attacks on Iran, Trump’s often contradictory statements and shifting positions have created confusion among investors. He has frequently reversed himself when market reactions seemed unfavorable to his policies.
On Thursday, the US president stated he didn’t expect to extend a two-week ceasefire to secure a deal, predicting a resolution “fairly soon,” though he would if necessary. He also hinted at a possible trip to Pakistan, which hosted initial talks, if a deal with Iran is reached.
Later, at an event in Nevada, Trump tried to reassure voters about rising energy costs caused by the conflict, saying the war in Iran was “going along swimmingly” and should end soon.
After a period of extreme volatility, oil price movements have become calmer. Brent traded within about a $10 range this week, a significant decrease from the record-setting $38 range seen in mid-March. A measure of the benchmark’s second-month contract volatility is now near its lowest point since early last month.
Additionally, Israel and Lebanon agreed to a 10-day ceasefire, which could help ease regional tensions. Israel has been engaged in conflict with Hezbollah, a key ally of Tehran. Iran has linked a ceasefire in Lebanon to conditions for a pause in its own fighting with Washington. Trump expressed hope that Hezbollah would “act nicely.”
