Oil prices tumbled over 4% as U.S. President Donald Trump announced he had halted a planned strike on Iran, citing a request from Tehran and other Middle Eastern countries to await an agreed-upon deal. The proposed agreement reportedly includes the opening of the Strait of Hormuz and an end to Iran’s nuclear program.
The de-escalation led to significant drops in both West Texas Intermediate and Brent crude futures, easing geopolitical risk premiums for investors.
An oilfield crew, contracted by the Railroad Commission of Texas (RRC), works a service rig during a state-funded oil well plugging operation in Midland, Texas, US. (Eli Hartman | Bloomberg | Getty Images)
Oil prices experienced a significant drop in early Asian trading as geopolitical tensions eased, following U.S. President Donald Trump's announcement that he had called off a planned military strike against Iran. The decision came after Trump stated that Iran, along with other Middle Eastern nations, had requested a delay in any potential attack.
In a post on his Truth Social platform, Trump revealed, "We have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to." He further elaborated that this proposed agreement would entail the "Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran's nuclear threat."
The announcement led to a sharp decline in oil benchmarks. West Texas Intermediate (WTI) futures for September delivery fell by approximately 6.17%, settling at $79.45 per barrel. Simultaneously, Brent crude futures for October delivery saw a decrease of 5.31%, trading at $83.26 a barrel.
Trump had reportedly been considering further military action against Iran amidst dwindling hopes for a diplomatic resolution to the ongoing conflict, which escalated on February 28th. The preliminary agreement mentioned by Trump appears to be a significant development, potentially altering the regional dynamics.
Tehran's response to Trump's statement was cautious. Seyyed Majid Ibn Al-Reza, Iran's acting defense minister, was quoted by state media as saying, "Although the enemy's recent statements are part of a psychological and cognitive warfare campaign, we consider every threat to be real and take it seriously."
Meanwhile, Iran's Fars International news agency, affiliated with the Islamic Revolutionary Guard Corps, appeared to downplay Trump's proposal, characterizing his demands as a mere "wish list" in a Telegram post.
This report was contributed to by CNBC's Azhar Sukri and Terri Cullen.
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