Oil prices fell sharply Friday following a report from Reuters that Pakistan is "exploring a path towards a resumption of stalled U.S.-Iran talks."
Prices had already retreated from their Thursday high above $100 a barrel earlier in the day despite continued tensions between the two countries and widening hostilities in the region.
Front-month contracts for Brent, the global oil price benchmark, were down around 9.5% Friday to $91.15 a barrel, after trading above $101 at points on Thursday. Brent has surged more than 10% this week. Contracts for West Texas Intermediate crude were similarly down, shedding nearly 4% to $88.83.
President Donald Trump said he was close to a decision on whether to launch a "massive attack" on Iran, Axios reported Thursday.
"The escalatory rhetoric raised fears of a more prolonged stagflationary shock," Deutsche Bank strategist Jim Reid said.
Stock market investors will be hoping that the conflict premium for oil is fading -- that crude prices are seeing a pullback even as the drumbeats of war continue.
But it remains to be seen if oil is at the start of a meaningful retrenchment or if prices are just paring impressive gains after a meaningful rally.
What is certain is that conflict-related supply constraints will continue to be in the driver's seat for oil -- it's just a matter of how heavy war footing is on the gas.
Some analysts, at least, see renewed fighting in the Middle East as rebuilding the risk premium for oil, which suggests that the slide back in prices on Friday could be shorter-lived than many will hope.
"Reports of threats against energy infrastructure and growing instability around key shipping routes have rebuilt a sizable geopolitical risk premium into oil markets. Investor sentiment has also been dampened by continued disruption in the Red Sea, where attacks on commercial vessels have compounded concerns over global trade and energy security," said Daniela Hathorn, an analyst at Capital.com.
"Developments have reinforced the view that geopolitical risks are unlikely to fade anytime soon, keeping energy markets tight and inflation risks elevated," Hathorn added.
Write to Jack Denton at jack.denton@barrons.com and Anita Hamilton at anita.hamilton@barrons.com
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(END) Dow Jones Newswires
July 24, 2026 13:51 ET (17:51 GMT)
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