Oil prices have closed at a lower level following the easing of US sanctions, which has alleviated concerns regarding potential escalation in Iran. Oil prices experienced a decline on Friday. The United States has unveiled a fresh set of sanctions concerning Iran. This diplomatic maneuver has generated optimism regarding a potential accord. Previously, President Trump indicated that he could reach a decision regarding U.S. engagement in the Israel-Iran conflict in the forthcoming two weeks. Brent crude futures and U.S. West Texas Intermediate crude both saw a decrease. The market is closely monitoring for possible supply disruptions.

Oil prices experienced a decline on Friday following the imposition of new Iran-related sanctions by the U.S., reflecting a diplomatic strategy that has fostered optimism for a potential negotiated settlement. This development came a day after President Donald Trump indicated that he may require two weeks to determine the U.S. stance on the Israel-Iran conflict. Brent crude futures concluded the session with a decline of $1.84, representing a decrease of 2.33%, settling at $77.01 per barrel. U.S. West Texas Intermediate crude for July, which did not settle on Thursday due to a U.S. holiday and is set to expire on Friday, experienced a decline of 21 cents, or 0.28%, closing at $74.93. The more liquid August contract concluded at $73.84.

Brent experienced a weekly increase of 3.6%, whereas front-month U.S. crude futures saw a rise of 2.7%. The Trump administration has announced new sanctions related to Iran, which encompass two entities located in Hong Kong, as well as sanctions pertaining to counter-terrorism, as detailed in a notice on the U.S. Treasury Department’s website. The sanctions are directed at a minimum of 20 entities, five individuals, and three vessels, as reported by the Treasury’s Office of Foreign Asset Control. “Those sanctions are having a dual impact.” They could represent a component of a more extensive negotiation strategy concerning Iran. “The fact they are undertaking this is a signal they are trying to resolve this outside of conflict,” stated John Kilduff, partner at Again Capital in New York. Oil prices surged nearly 3% on Thursday following Israel’s airstrikes on nuclear sites in Iran, as Iran, the third-largest producer within OPEC, retaliated with missile and drone attacks on Israel. Both parties exhibited no indications of yielding in the ongoing conflict that has persisted for a week. Brent prices experienced a decline following the announcement from the White House regarding Trump’s impending decision on U.S. involvement in the Israel-Iran conflict within the next two weeks.

“Although a major escalation is yet to occur, risks to supply from the region remain high, still hinging upon the potential for U.S. involvement,” stated Russell Shor, senior market analyst at Tradu.com. Israel’s UN ambassador stated that Israel is looking for authentic initiatives regarding Iran’s nuclear capabilities from the meeting between European and Iranian ministers on Friday, rather than merely another series of discussions. “However, while Israel and Iran continue their hostilities, there remains the potential for an unforeseen action that could escalate the conflict and impact oil infrastructure,” stated PVM analyst John Evans.

Historically, Iran has issued threats to obstruct the Strait of Hormuz, a crucial passage for oil exports from the Middle East. According to Giovanni Staunovo, an analyst at UBS, oil exports have remained uninterrupted and supply levels are adequate. “The trajectory of oil prices moving forward will hinge on the occurrence of any supply disruptions,” he stated. An escalation of the conflict, characterized by Israeli attacks on export infrastructure or Iranian disruptions of shipping through the strait, could result in oil prices reaching $100 a barrel, according to Panmure Liberum analyst Ashley Kelty.

In other developments, the EU has decided to withdraw its proposal to reduce the price cap on Russian oil to $45, as reported by Bloomberg. This week, U.S. energy companies reduced the count of oil and natural gas rigs in operation for the eighth consecutive week, marking the first such occurrence since September 2023, according to the well-regarded report from energy services firm Baker Hughes. The oil and gas rig count, a preliminary gauge of forthcoming production, decreased by one to 554 in the week ending June 20, marking the lowest level since November 2021.