MORGANABLE BUSINESS / MARKETS
Oil prices fell on Friday after US President Donald Trump said the United States would not attack Iran before the November 3 midterm elections.
Akure —
His announcement eased fears of an immediate escalation in the Middle East, where the conflict has disrupted energy markets and threatened important shipping routes. However, traders remained cautious because the statement did not end the conflict or guarantee safe passage for oil tankers.
Brent crude futures dropped $1.10, or 1.1 per cent, to $103.18 a barrel by 1328 GMT. Meanwhile, US West Texas Intermediate crude fell 49 cents, or 0.5 per cent, to $91.00 a barrel, according to Reuters.
Despite Friday’s losses, Brent remained on track for a weekly gain, while WTI was heading towards a slight weekly decline.
Trump said Washington was having productive discussions with Tehran and would not launch attacks before the elections next month. His comments came after reports that the administration had considered another strike.
As a result, investors lowered some of the extra cost they had built into oil prices to account for the risk of further conflict.
Still, markets can change quickly when political statements or military developments alter expectations.
The conflict has unsettled energy markets because the Middle East supplies a large share of the world’s oil. Traders are especially concerned about the Strait of Hormuz, a narrow waterway between Iran and Oman.
Before the war, the route carried shipments equal to about one-fifth of global oil and fuel supplies.
Any serious disruption could delay deliveries, increase transport costs and force buyers to compete for alternative supplies.
For that reason, Friday’s decline does not necessarily signal lasting relief. Threats to vessels in the Gulf have kept shipping companies and energy buyers on alert.
Oil prices could rise again if attacks resume or if negotiations break down.
Conversely, a credible agreement that restores safe passage through the strait could ease pressure on prices and improve confidence among importers.
That proposal could help stabilise shipping if both sides agree on practical terms.
However, traders will want to see evidence that tankers can travel safely and regularly before removing much of the risk premium from prices.
Until then, diplomatic progress may offer only temporary reassurance.
Meanwhile, Washington continues to put economic pressure on Tehran.
The United States has imposed sanctions on individuals, networks and 17 vessels accused of transporting Iranian crude oil, petroleum products and petrochemicals.
These measures show that the administration is still seeking to restrict Iran’s oil trade, even as it signals a pause in direct military action before the election.
China’s plans to resume refined-fuel exports also weighed on oil markets.
The country, the world’s largest oil importer, is set to restart shipments after a short pause during its Golden Week holiday.
Additional exports could help ease tight supplies of diesel, gasoline and jet fuel.
Therefore, traders are balancing the prospect of more fuel becoming available against continuing risks to crude production and shipping across the Middle East.
However, global fuel supplies remain vulnerable to several conflicts. The war involving Iran and Russia’s continuing war with Ukraine have disrupted the movement of refined products, including diesel and jet fuel.
If export routes face further problems, buyers may pay more even when benchmark crude prices retreat.
This uncertainty continues to influence decisions across the global energy market.
A separate supply concern comes from Hurricane Isaias in the Gulf of Mexico. Producers had shut in about 1.3 million barrels of oil per day by Thursday, representing 62.9 per cent of current production in the area, according to figures cited by Reuters.
Nevertheless, the storm’s longer-term effect will depend on its path, the safety of offshore facilities and how quickly companies can restart operations.
These opposing developments explain why prices can fall while major supply risks remain. Trump’s announcement reduced the immediate likelihood of another US attack before the election.
At the same time, China’s expected fuel exports could improve availability. Yet the hurricane has disrupted US production, while uncertainty around the Strait of Hormuz continues to threaten shipments. Traders must weigh all these factors rather than respond to one headline alone.
The price movement also matters to governments and businesses that depend on imported energy.
Lower crude prices can reduce costs for refiners and, over time, may ease pressure on transport and manufacturing.
However, the effect on consumers is not automatic. Refining costs, shipping charges, taxes and exchange rates also influence the final price of petrol, diesel and other fuels.
In countries with weak currencies, a fall in crude prices may bring only limited relief.
Therefore, consumers may not see an immediate reduction in fuel prices even when international oil benchmarks decline.
Investors will now follow developments in US-Iran talks, shipping activity in the Gulf and updates on the hurricane.
They will also monitor sanctions, Chinese fuel exports and any new reports of attacks on energy infrastructure.
Each development could shift expectations about supply. In particular, safe and consistent traffic through the Strait of Hormuz would offer stronger evidence of improvement than political statements alone.
For now, Friday’s decline reflects reduced fears of an immediate escalation, not a confirmed end to the crisis.
Trump’s pledge has given traders a reason to scale back some concerns, but the wider security situation remains uncertain.
If negotiations produce concrete progress and shipping improves, oil prices could ease further. If talks fail or supplies face new disruptions, prices may rebound. Therefore, traders are likely to remain alert as the market looks for clearer signs of stability.
