Oil prices fell sharply on Friday after President Donald Trump said he would delay a decision on direct U.S. involvement in the Israel-Iran conflict, opting to wait up to two weeks to allow space for possible negotiations on Iran's nuclear program.
Brent crude dropped $2.78, or 3.53%, to $76.07 per barrel. U.S. West Texas Intermediate for July gained 84 cents, or 1.12%, to $74.30 per barrel. Despite the Friday decline, both benchmarks were poised for their third consecutive weekly gain.
"Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks," Trump said in a statement read Thursday by White House Press Secretary Karoline Leavitt.
The president's comments came amid intensifying fighting between Israel and Iran. On Thursday, Israeli airstrikes targeted strategic sites in Iran, including nuclear facilities, prompting retaliatory missile and drone attacks from Tehran. Israeli authorities said a missile had struck Soroka Hospital in Be'er Sheva.
Though oil prices initially spiked Thursday on fears of a wider conflict, markets pulled back Friday following Trump's announcement. Analysts noted that while tensions are high, actual disruptions to oil supply remain limited.
"There is no shortage of supply," said Giovanni Staunovo, analyst at UBS, noting that exports from Iran and neighboring producers have not been interrupted.
Still, the potential for escalation remains. "While Israel and Iran carry on pounding away at each other, there can always be an unintended action that escalates the conflict and touches upon oil infrastructure," said John Evans, analyst at PVM.
Iran has previously threatened to close the Strait of Hormuz, a critical chokepoint for global oil shipments. Although the strait remains open, some experts warn that any attack on oil infrastructure or shipping lanes could push crude prices well above $100 per barrel.
