Oil prices declined by more than 2% on Friday 12 June, continuing their downward trend from the prior session after US President Donald Trump called off planned military action against Iran, reported Reuters.
This decision reduced immediate concerns about a potential escalation between the two countries following recent hostilities.
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By 06:40 GMT, Brent crude futures had dropped by $2.11, or 2.3%, to $88.27 a barrel (bbl).
Meanwhile, US West Texas Intermediate (WTI) crude was down by $1.90, or 2.2%, at $85.81/bbl.
The market reaction followed President Trump’s announcement on Thursday that planned strikes had been called off, with negotiations with Iran reportedly progressing.
Trump indicated that a peace agreement, which could lead to the reopening of the Strait of Hormuz, might be signed as early as the weekend, although Iranian officials stated they had not yet reached a final decision.
Tensions have remained high around the Strait of Hormuz, a critical passageway that handles around a fifth of the world’s oil and liquefied natural gas (LNG) shipments.
Iran announced “the closure” of the strait on Thursday and threatened to fire on any vessels trying to transit the waterway, further limiting already restricted shipping activity.
State media in Iran reported on Friday that Iranian forces prevented a tanker from traversing the strait without proper coordination.
However, the US military stated on social media that commercial shipping was still passing through the area.
Meanwhile, the Organisation of the Petroleum Exporting Countries (Opec) on Thursday revised its global oil demand growth forecast for 2026 downward to 970,000 barrels per day, from a previous estimate of 1.17 million barrels per day (mbbl/d).
Opec said it expects a rebound in 2027, raising its forecast for that year’s demand growth to 1.73mbbl/d, up by 190,000 barrels from its previous projection.
Furthermore, negotiations between the US and Iran continue, with Trump emphasising that any agreement must ensure Iran does not develop nuclear weapons, reported Reuters.
Iranian officials are seeking the lifting of international sanctions, the release of frozen assets and recognition of their control over the Strait of Hormuz.
