Brent crude futures dropped $1.21, or 1.3%, to $89.17 a barrel by 0042 GMT. US West Texas Intermediate (WTI) crude fell $1.23, or 1.4%, to $86.48 a barrel. For the week, Brent was down 4.2%, while WTI registered a decline of 4.4%.
Trump, who had earlier warned that Iran could face a severe military response, said on Thursday that the proposed strikes had been called off as negotiations with Tehran had made progress. However, Iran’s semi-official Fars news agency reported that authorities in Tehran had not approved the text of any agreement.
IG market analyst Tony Sycamore said the market reaction had been rapid and significant, although it remained uncertain whether the latest developments would lead to a lasting breakthrough or prove to be another short-lived period of optimism.
Earlier this week, Iran announced the closure of the Strait of Hormuz and warned that vessels attempting to transit the waterway could come under attack. The prolonged disruption in the strait, which typically handles around one-fifth of global oil and liquefied natural gas shipments, has been a major factor supporting elevated crude prices in recent months.
