West Texas Intermediate (WTI) US Oil declines to around $92.00 on Friday at the time of writing, down 2.76% on the day, as markets reduce the geopolitical risk premium in the Middle East.
The pullback in Oil prices comes despite renewed military tensions between the United States (US) and Iran, with investors currently favoring the scenario of a continued ceasefire between the two countries
Market sentiment improved after comments from US President Donald Trump, who said in an interview with ABC News that the strikes exchanged on Thursday near the Strait of Hormuz did not signal a resumption of the war. “It’s just a love tap,” Trump said, adding that the ceasefire remains fully in effect. However, the US president reiterated that Washington could strike Iran again if Tehran refuses the terms of a potential agreement. Traders are also monitoring diplomatic discussions surrounding the US proposal aimed at reopening the Strait of Hormuz and ending the war.
According to several media reports, the United States is still awaiting an official response from Iran regarding the memorandum of understanding delivered by Washington, which includes restrictions on Tehran’s nuclear ambitions. Despite this renewed optimism, tensions remain elevated in the region. Iranian officials accused the United States of violating the ceasefire after strikes targeting ships near the Strait of Hormuz and certain civilian areas.