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US Oil Update: Futures Drop as Markets Await Clarity on US-Iran Deal Prospects

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Crude oil futures settled lower in after-hours trading on Friday as markets weighed conflicting messages from the US and Iran over the prospects for a peace deal that could ease the ongoing Middle East conflict and restore oil flows through the Strait of Hormuz.

Front-month West Texas Intermediate crude futures plunged 3.96% to $84.24 per barrel, and Brent futures retreated by 3.99% to $86.79/bbl.

Soojin Kim, research analyst at MUFG, said oil prices extended losses after President Trump said a peace deal with Iran could be signed as soon as the weekend.

The US and Iran could sign a deal that includes reopening the Hormuz and taking steps to dismantle Iran's nuclear program in the "next few days," according to media reports.

However, a Trump administration official reportedly said that the US is not 100% confident that the agreement they reached will be signed at all. The administration official expects an 80% chance that the US and Iran will sign an agreement in the coming days.

Pakistan's Prime Minister Shehbaz Sharif said on Friday that a final, agreed text of a peace deal between the US and Iran had been reached.

Pakistan's Prime Minister Sharif, in a social media post on X, confirmed that a final, agreed-upon text of the peace deal has been reached and that Pakistan is working closely with both sides to finalize the next steps.

On Thursday, Trump said that the US had "just made a great settlement of the war with Iran," subject to the "finalization of documents."

However, the US President, in a Truth Social post on Friday, rejected media reports on the Iranian text of the deal.

Iranian Foreign Minister Seyed Abbas Araghchi, in response, said in a social media post that a memorandum of understanding between the US and Iran "has never been closer."

"Pending its finalization, the media should refrain from entering speculation about its content," Araghchi said. "In line with our responsible and transparent approach, all details will be shared with the public in due course."

Araghchi said that the Hormuz would no longer be administered before the war, adding that Tehran would charge service fees and maintain a deterrent posture over the strategic waterway.

On the supply side, Energy Secretary Chris Wright reportedly said that about 7 million barrels per day of oil are leaving the Persian Gulf with the help of the US military. Secretary Wright said that about half of the crude that has been stuck in Hormuz since the outbreak of the Middle East conflict.

OPEC lowered its forecast for global crude demand growth in 2026 to 970,000 barrels per day, according to the producer group's monthly report published on Thursday. The current forecast reduced the expected oil demand growth in 2026 from 1.17 million b/d.

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