Oil prices fell sharply on Friday after President Donald Trump announced he was close to completing a peace deal with Iran, with the price of oil retreating from the elevated levels seen since early March when the Strait of Hormuz was closed. U.S. crude oil futures dropped 3.2% to close at $84.88 per barrel, while Brent crude fell 3.4% to settle at $87.33, marking the steepest weekly losses in months as traders grew confident that a reopening of the vital shipping chokepoint was imminent.
A senior Trump administration official said there was an 80% chance the U.S. and Iran would sign an agreement in the coming days, according to CNBC. The deal would reopen the Strait of Hormuz, lift the U.S. naval blockade, dismantle Iran’s nuclear program, and remove its enriched uranium, the official said. Pakistan Prime Minister Shehbaz Sharif, who has mediated the talks, confirmed that a final agreed-upon text of the peace deal had been reached, stating that “peace has never been this close as it is now.”
The decline in the price of oil reflects the massive relief premium that has been built into energy markets since Iran blocked the Strait of Hormuz on March 4, 2026. At its peak in April, Brent crude surged to nearly $120 a barrel—a 55% jump from pre-war levels—as traders feared sustained disruption to one-fifth of the world’s oil supply. The International Energy Agency coordinated a release of 400 million barrels of emergency crude to help stabilize markets after prices reached $113 a barrel.
Before the war began, Brent crude was trading at around $70 a barrel, according to The Guardian. Despite the recent decline, crude remains up more than 20% since the U.S. and Israel attacked Iran on February 28, reflecting lingering geopolitical uncertainty. Goldman Sachs said on Friday that it still expected oil prices to average $90 a barrel in the last quarter of 2026 as oil flows slowly normalize from August and countries refill their depleted stockpiles, though the bank lowered its 2027 forecast to $80 a barrel due to expected supply increases from the Americas and the UAE.
Iran’s Foreign Minister Seyed Abbas Araghchi said in a social media post that a memorandum of understanding between the U.S. and Iran “has never been closer,” signaling that both sides were nearing final terms. However, President Trump denied details of a draft agreement that Iranian state news agency Mehr had released earlier Friday, saying the terms “have NOTHING to do with the terms that were agreed to, in writing.” The competing narratives underscored the complexity of finalizing the accord, though market participants interpreted Trump’s cancellation of planned military strikes as a strong signal that diplomacy was advancing.
Sources
- CNBC — Oil prices, deal terms, administration official’s 80% confidence, Pakistan PM confirmation, Iran Foreign Minister statement, and Goldman Sachs forecast
- The Guardian — Brent crude price levels, pre-war baseline, IEA emergency release, and market analyst commentary
