Washington, June 12, 2026 – Oil extended declines after President Donald Trump said a peace deal with Iran could be signed as soon as the weekend following US military strikes that cast doubt over progress to end the war.
Brent crude fell 2% to trade below $89 a barrel after closing at a two-month low on Thursday, while West Texas Intermediate was near $86.
Trump threatened to attack Iran again and seize its oil infrastructure, before announcing strikes were off and a deal was close.
Iran said no final conclusion on an agreement has been reached yet and the issue remains under review.
Risks to shipping still remain in the Strait of Hormuz, with Fox News reporting US forces shot down two Iranian attack drones overnight that appeared to be targeting commercial vessels. Iran said the waterway would be closed to all types of ships following the most recent hostilities from the US.
The US president has previously insisted an agreement with Iran was within reach dozens of times, but none has yet materialized.
The war has led to the near-total closure of Hormuz, choking off crucial supplies of crude, fuels and natural gas to global customers, while stoking inflation.
Iran has not yet approved any text for an agreement with the US, the semi-official Fars news agency reported.
The American military launched a second day of strikes against the Islamic Republic early Thursday afterTrump accused the country of dragging out talks on an interim peace deal.
“It feels like the market is increasingly betting that both sides ultimately have more to lose from failure than compromise,” said Haris Khurshid, the chief investment officer at Chicago-based Karobaar Capital LP.
“That doesn’t mean a deal is close. It just means the market no longer sees breakdown as the most likely outcome.”
Trump told reporters in the Oval Office that a signing could take place as soon as this weekend in Europe and that Vice President JD Vance would attend if it materializes.
He also said Iran’s supreme leader had agreed to a deal, though he cautioned the pact was not finalized.
The deal, described by Trump as a memorandum of understanding, would extend a ceasefire by 60 days, including in Lebanon, immediately reopen Hormuz without tolls and provide Iran with sanctions relief tied to its compliance with the agreement, Axios reported, citing an unnamed US official and a diplomat from one of the mediating countries.
In return, the US would lift its naval blockade, and the two sides would continue nuclear negotiations.
Even if the two sides eventually reach a deal, multiple hurdles will impede the full resumption of normal oil flows.
Among them, mines in Hormuz must be removed, shut-in fields may take months to restart, and damage to energy infrastructure from drone and missile strikes needs to be repaired.
Some tankers are exiting the Persian Gulf through the strait, but there are signs in parts of the world that oil inventories are drawing dramatically.
Fuel stockpiles in Singapore are at the lowest level since 2013, while US crude supplies have tumbled at a rapid rate over the past five weeks. (Bloomberg)
