Oil prices fell sharply on Friday as investors reacted to U.S. President Donald Trump’s announcement that he would wait up to two weeks before deciding whether to join Israel’s ongoing military campaign against Iran.
Tensions have escalated in the Middle East since Israel launched strikes against Iran last week, sparking a series of retaliatory attacks. Despite the rising hostilities, Trump’s statement hinted at a possible de-escalation, suggesting diplomatic efforts might still be viable.
Speaking through White House Press Secretary Karoline Leavitt, Trump said:
“Based on the fact that there’s a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks.”
Leavitt added “If there’s a chance for diplomacy, the president’s always going to grab it, but he’s not afraid to use strength as well.”
Market Reaction
Crude oil markets reacted swiftly. Both Brent and WTI crude fell by around 2%, with Brent dropping to $76.85 per barrel and WTI to $73.62.
Stephen Innes of SPI Asset Management described the situation as precarious:
“Crude still calls the shots, and volatility’s the devil in the room. We’re trading a geopolitical powder keg with a lit fuse. Trump’s two-week ‘thinking window’ isn’t a cooling-off period—it’s a ticking volatility clock.”
Global Market Overview
Stock markets were mixed following a public holiday in New York. Gains were recorded in Hong Kong, Taipei, Mumbai, and Bangkok, as well as London, Paris, and Frankfurt. Seoul’s Kospi rose over 1%, surpassing 3,000 points for the first time in over three years, boosted by optimism following a recent presidential election.
However, Tokyo’s Nikkei 225 slipped 0.2% as rising core inflation, particularly a spike in rice prices, raised concerns ahead of upcoming elections. Losses were also seen in Shanghai, Sydney, Singapore, Manila, and Jakarta.
Ongoing Trade War Concerns
Beyond the Middle East crisis, Trump’s trade war continues to loom over markets. A 90-day pause on new tariffs is set to expire soon, with little progress on trade agreements. David Sekera of Morningstar warned that uncertainty over trade negotiations could spark significant market fluctuations in the coming weeks.
