Crude oil futures declined on Friday morning after US President Donald Trump indicated that a peace deal with Iran could be reached soon, according to a report by The Hindu BusinessLine.
Price Moves
At 10 am on Friday, August Brent oil futures on ICE were at $88.66, down 1.90%, and July crude oil futures on WTI (NYMEX) were at $86.11, down 1.82%. On the Multi Commodity Exchange (MCX), June crude oil futures traded at ₹8,224, down 1.44% from the previous close of ₹8,344, and July futures were at ₹8,116, down 1.50% from ₹8,240.
Trump's Announcement
In a post on Truth Social, Trump said: “Based on the fact that discussions with the Islamic Republic of Iran have been brought to the highest level of Iranian leadership and approved, I have, as President of the United States of America, cancelled the scheduled strikes and bombings against Iran this evening.” The post listed parties involved in discussions: the United States, Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, Egypt, and others. Trump added that a naval blockade will remain until the transaction is finalized, with signing time and place to be announced shortly.
Analyst Caution
In their Commodities Feed, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, noted that Trump has said a deal is close many times before, only for hostilities to resume. However, there appears to be more positive noise from the US and other parties this time. “The key is the message coming out of Tehran. And for now, it has been very quiet,” they said. They cautioned against assuming the ceasefire extension is a done deal, adding that even if it is, it could be fragile and could easily fall apart if nuclear talks do not progress.
Supply and Demand Dynamics
The analysts stated that Brent falling below $90 a barrel is no surprise. They noted that the benign price action in recent weeks masks the scale of supply disruptions from the Persian Gulf. In the absence of a deal, this is unlikely to last. “We believe the market reaches an inflection point in late July if we do not see oil flows resuming before then. This is when inventory levels and seasonally stronger demand push prices significantly higher towards $120-130 a barrel,” they said.
OPEC Production Data
According to OPEC's monthly oil market report, OPEC production continued to decline in May. Output fell 177,000 barrels a day month-on-month to 18.8 million barrels a day. Iran saw the biggest decline, falling 546,000 barrels a day as the US blockade puts pressure on its oil industry. This decline was offset by supply increases from other Persian Gulf producers, with more oil flowing through the Strait of Hormuz.
| Country | Month-on-Month Change (b/d) |
|---|---|
| Saudi Arabia | +157,000 |
| UAE | +87,000 |
| Iraq | +75,000 |
OPEC remains fairly constructive on global oil demand, expecting it to grow just shy of 1 million barrels a day year-on-year in 2026, down from a previous forecast of 1.17 million b/d. Most other agencies forecast a contraction in demand this year amid supply disruptions in West Asia, according to the report.
Other Commodities
On MCX, June nickel futures were at ₹1,722.10, up 0.74% from ₹1,709.40. On NCDEX, June dhaniya contracts were at ₹12,776, up 0.90% from ₹12,662, and July cottonseed oilcake futures were at ₹3,546, up 0.08% from ₹3,543.
Outlook
The key data points to watch are signals from Tehran and any progress in nuclear talks. The ING analysts flagged that the market could face a sharp price spike toward $120-130 a barrel by late July if oil flows do not resume. For traders and procurement teams, the current decline offers a potential buying opportunity, but the fragility of any deal means risk management remains critical.
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