Oil Prices Drop Below $90 After Trump Announces Iran War Has Ended
Oil Prices Tumble on Hopes of Iran Deal
Oil prices tumbled below the $90 per barrel mark on Friday on hopes of a deal to restore global crude flows after signs of easing tensions in the Middle East. [1] Around 7 a.m. IST, WTI Crude stood at 86.73, down 0.98 or 1.12%, while Brent Crude was at 89.45, down 0.93 or 1.03%. [1] These declines followed US President Donald Trump’s announcement that Washington had reached a framework agreement with Iran to end the war, with expectations of a formal deal in the coming days and the reopening of the Strait of Hormuz. [1] The immediate market reaction reflected relief that energy flows could normalize after weeks of disruption. [1]
Trump Declares End to War with Iran
Speaking during a tele-rally in support of Georgia lieutenant governor Burt Jones, who is contesting the state's gubernatorial election, Trump declared, “I don’t know if you heard, but we ended the war with Iran today.” [1] The US president further said that he expects an agreement to be signed “over the next few days,” repeating claims he has made several times during the conflict. [1] He also said the Strait of Hormuz would reopen once a deal is finalized. [1] On Thursday, President Trump said he canceled the scheduled strikes and bombing against Iran, claiming a "settlement" has been reached and a deal will be signed, possibly in Europe, as soon as this weekend. [2] Trump, who had earlier threatened to hit Iran “very hard,” called off planned strikes on Thursday, saying discussions with Iran had progressed. [1] The US called off planned strikes on Iran on Thursday after discussions progressed, though Iran has not confirmed approval of any agreement text. [1]
Background on Strait Closure and Price Surge
This comes after tensions intensified earlier this week. [1] On Wednesday, Iran announced the closure of the Strait of Hormuz, warning that any vessel attempting to pass through would come under fire. [1] Tehran’s months-long blockade of the strait, which normally carries a fifth of global oil and liquefied natural gas shipments, had kept oil prices elevated. [1] The Middle East crisis has continued to keep global crude markets on edge, with prices previously remaining above the $100 per barrel mark compared with pre-conflict levels of $70 per barrel. [1] The conflict, which began on February 28 with joint US and Israeli strikes on Iran, has continued to disrupt energy sentiment globally. [1] Iran’s tightening of its control over the Strait of Hormuz, a route carrying around 20% of the world’s fuel, has sent ripples across economies worldwide. [1] The US military said on social media that commercial ships continued to transit the waterway. [1]
South Korea Stocks Surge at Open
Seoul stocks opened sharply higher Thursday as investors pinned hopes of a possible end to the Iran war after President Donald Trump said the US has reached a "great settlement." [2] Opening 6.44 percent higher, the benchmark Korea Composite Stock Price Index rose 577.61 points, or 7.44 percent, at 8,341.56, as of 9:15 a.m. [2] The Kospi tracked overnight advances on Wall Street, where major stock indexes closed sharply higher. [2] "There are several favorable factors, including a possible signing of a memorandum of understanding between the US and Iran, and strong performances of semiconductor stocks in the US," Han Ji-young, an analyst at Kiwoom Securities, said. [2] Stocks gathered ground across the board. [2] Chip giant Samsung Electronics jumped 10.79 percent, while its industry rival SK hynix added 8.76 percent. [2] Top carmaker Hyundai Motor went up 5.53 percent, defense giant Hanwha Aerospace advanced 4.44 percent, and electronics maker LG Electronics moved up 6.19 percent. [2] The local currency was trading at 1,521 won against the US dollar, up 7.9 won from the previous session. [2]
Uncertainties Remain as Iran Has Not Confirmed
However, Iran’s semi-official Fars news agency reported that Tehran had not approved the text of any agreement. [1] Iran has not confirmed it. [2] The lack of Iranian confirmation via Fars news agency and the US military's statement that commercial ships continued transiting the strait highlight ongoing uncertainties. [1] [2] These points indicate that while US officials described progress, formal approval from Tehran remains pending. [1]
Broader Market and Inflation Impact
US producer inflation, meanwhile, posted the largest annual gain in some three years in May as the Middle East crisis boosted the cost of energy products, raising speculation that the US Federal Reserve may quicken its monetary tightening to tame inflation. [2] The developments influenced overnight Wall Street advances as major stock indexes closed sharply higher. [2] The Kospi’s opening surge reflected these overnight gains on hopes of the Iran deal. [2]
What to watch next
Investors will monitor whether a formal agreement is signed in the coming days and whether the Strait of Hormuz reopens as described by President Trump.
