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Oil prices fell sharply in Asian trade on Friday, as news of U.S. President Donald Trump’s decision on potential involvement in the Israel-Iran conflict was delayed for two weeks. Despite this dip, oil prices remained on track for their third straight week of gains, with geopolitical concerns in the Middle East and U.S. inventory data continuing to support crude prices.
Trump’s Decision on Iran Attack Delayed
The White House announced that President Trump will take two weeks to decide on whether to attack Iran, calming some uncertainty about an imminent U.S. strike. This news helped alleviate immediate fears of an escalation in the conflict, particularly after reports had surfaced of U.S. officials preparing for a potential military intervention.
While the situation remains volatile, the delay in a U.S. military response temporarily eased concerns. Trump had previously expressed that there was still a possibility of resuming nuclear talks with Tehran, although those talks had largely collapsed after Israel’s attack on Iranian nuclear facilities. As the conflict entered its eighth day, markets remained concerned about further military actions, especially potential Israeli strikes on Iran’s Fordow nuclear enrichment facility.
Oil Prices Underpin by Supply Disruptions
Despite the dip in prices on Friday, oil was still headed for its third consecutive week of gains. Brent crude futures for August fell 1.9% to $77.33 per barrel, while West Texas Intermediate (WTI) crude futures, which did not settle on Thursday due to a U.S. holiday, gained 0.8% to $74.07 per barrel.
The gains for the week were driven by concerns over supply disruptions from the Middle East, with Iran—one of the largest oil producers in OPEC—being directly impacted by the conflict. The possibility of more U.S. sanctions on Iranian oil exports also weighed on the market. Furthermore, oil prices have been buoyed by fears that the ongoing conflict could further disrupt oil shipments from the region, especially through key chokepoints like the Strait of Hormuz.
U.S. Inventory Draw Boosts Oil Prices
Oil was also supported by data showing a significant drawdown in U.S. oil inventories, with a reported decline of over 10 million barrels, indicating tightening supplies in the world’s largest fuel consumer. This data, coupled with expectations of stronger fuel demand due to the summer travel season, has kept oil prices elevated.
Weekly Performance and Outlook
For the week, both Brent and WTI futures were up by 3.5% to 4%, driven largely by the continued geopolitical tensions and the U.S. inventory data. Prices had surged nearly 12% the previous week after Israel’s strike on Iran, and while prices retreated on Friday, the upward trend remains intact.
Looking ahead, traders will be closely monitoring developments in the Israel-Iran conflict and any updates on U.S. involvement. The market’s focus will also be on any further actions from Israel, particularly regarding additional strikes on Iranian nuclear facilities, and how these events might impact global oil supply and prices.
While oil prices experienced a brief pullback on Friday due to uncertainty over U.S. military involvement in the Israel-Iran conflict, the overall trend remains bullish. Geopolitical risks in the Middle East, the potential for U.S. sanctions on Iranian oil, and tightening U.S. inventories continue to provide support for crude prices. Oil is set to finish the week with solid gains, marking its third consecutive week of increases. Traders will continue to watch developments in the Middle East and any shifts in U.S. policy closely as they assess the potential for further price movements.
