Oil heads for weekly loss as Trump spurns Iran deal

Oil prices fell on Friday and were on track to snap a two-week winning streak, as easing geopolitical risk premiums and a stalled diplomatic process between the United States and Iran weighed on the market.

Brent crude futures dropped 0.3% to $89.45 a barrel in early Asian trading, while West Texas Intermediate crude fell 0.3% to $83.31, according to Reuters. Both benchmarks were poised to end the week lower, with Brent down 5.3% and WTI falling 4.3%.globalbankingandfinance

Trump Administration Rejects Return to June Deal

The weekly decline came after The Wall Street Journal News Corp ↗ 0.23% reported on Wednesday that the Trump administration has repeatedly told mediators it has no interest in reviving the June memorandum of understanding it reached with Iran. The original deal, endorsed by President Trump at the Palace of Versailles and facilitated by Vice President JD Vance, sought to reopen the Strait of Hormuz and initiate talks on Iran's nuclear ambitions in exchange for sanctions relief.wsj

That agreement unraveled within weeks when Iran began targeting vessels to assert control over the critical waterway. The MOU's 60-day negotiating window expired in mid-August without a final deal, and both sides have since signaled that extending it would be pointless.nypost+2

Washington said on Thursday that it was not in talks with Iran despite diplomatic efforts by other countries to re-engage the two sides. Earlier in the week, the U.S. announced what it called the "toughest sanctions in history" on Iran, a move Treasury Secretary Scott Bessent said would lessen the need for major military operations against Tehran. Iran described the sanctions as an "inhumane and hostile act".reuters+1

Hormuz Traffic Inches Up but Remains Subdued

Shipping traffic at the Strait of Hormuz — through which roughly 20% of global oil consumption normally passes — rose slightly on Wednesday to 10 visible commodity vessel transits, up from eight the previous day, according to Kpler data cited by Reuters. The figure remained well below the 10-day moving average of about 15 vessels.dataportuaria

Iran and Oman are still working on details of an agreement on the waterway, a senior Iranian source said on Wednesday, after Iran's Revolutionary Guards claimed the two countries had agreed how to share the strait and its revenue.dataportuaria

BNY (Bank of New York Mellon) The Bank of New York Mellon Corporation ↘ 0.52% noted this week that the partial recovery in Hormuz supply has eased the geopolitical risk premium built into crude prices, shifting market drivers back toward fundamentals like inventories and OPEC+ policy.cryptorank

Broader Geopolitical Risks Linger

The oil market also contended with escalating tensions between Russia and NATO. Moscow warned it could strike British military targets inside and outside Ukraine in response to Kyiv's use of British-supplied long-range cruise missiles. Trump, however, said Russian President Vladimir Putin would not attack a NATO country, downplaying reports that CIA Director John Ratcliffe had warned Russian officials against such a move.globalbankingandfinance