Oil drops sharply as Pakistan explores reviving U.S.-Iran talks

Wall Street found its footing on Friday after a turbulent week as oil prices retreated from near $100 a barrel, buoyed by a Reuters report that Pakistan is exploring a path toward reviving stalled U.S.-Iran peace talks following a push initiated by China.

The S&P 500 rose about 0.4%, while the Dow Jones Industrial Average gained roughly 0.5%. The Nasdaq 100 slipped about 0.5%, weighed down by continued pressure on technology shares. Treasury yields retreated from their highest levels of the year as oil's pullback eased inflation concerns.wsj

Oil Pulls Back From Weekly Highs

Brent crude fell to around $95.86, down nearly 5% on the day, according to Trading Economics. West Texas Intermediate dropped about 4.2% to $88.31 a barrel. Despite Friday's decline, both benchmarks posted sharp weekly gains — Brent rose roughly 13.5% for the week after Houthi attacks on Red Sea tankers and a temporary shutdown of Kazakhstan's main export route had pushed prices toward $100 earlier in the session on Thursday.tradingeconomics+2

The retreat came after Reuters reported from Islamabad that Pakistan is working toward a resumption of stalled negotiations between Washington and Tehran over ending their nearly five-month-old war. Exploratory discussions took place during a visit by Iran's Interior Minister Eskandar Momeni to Islamabad this week — his second within 10 days, sources told Reuters. The diplomatic effort follows a push initiated by China, though Pakistani officials said a halt in attacks on Saudi Arabia and other Gulf nations would be a "pre-requisite for any talks to resume".reuters

Fragile Footing

Markets remain on edge. Oil prices have whipsawed since President Trump declared the ceasefire with Iran "over" on July 8, sending Brent from about $71 in early July to near $100 in just over two weeks. The rapid surge pushed average gasoline prices above $4 per gallon and revived speculation about a Federal Reserve rate increase.spectrumlocalnews+2

Bond markets reflected the unease. The 10-year Treasury yield declined three basis points to 4.66% on Friday but remained elevated after climbing sharply during the week. Investors now see roughly a 25% chance the Fed will raise rates at its next meeting, up from about 16% at the start of the week, according to The Wall Street Journal.wsj+1

The week's events underscored how geopolitical risk continues to dominate market sentiment. Any breakdown in the nascent diplomatic efforts could quickly send oil — and volatility — surging again.