Oil Falls Below $100 as U.S.-Iran Clash Rattles Hormuz Ceasefire
CNBC reported Friday that oil prices retreated below $100 per barrel after U.S. and Iranian forces exchanged fire in the Strait of Hormuz, reigniting fears that a shaky ceasefire between Washington and Tehran was coming apart.
Prices Reverse Early Gains
International benchmark Brent crude dipped around 0.4% to roughly $99.66 a barrel. It had briefly climbed above $101 earlier in Friday’s session before reversing. U.S. West Texas Intermediate fell approximately 0.7% to near $94.12. Both contracts had already closed lower on Thursday and were on track for weekly losses exceeding 7%.
The sudden reversal erased a short-lived rally tied to optimism over a potential diplomatic breakthrough between the two nations.
Both Sides Blame the Other for Hormuz Skirmish
Washington and Tehran each accused the other of firing first during the Strait of Hormuz incident. The exchange of fire included small boats and drone assets, according to a Truth Social post from U.S. President Donald Trump. Trump said U.S. forces neutralized the Iranian assets involved and warned Tehran it would face additional military action unless it agreed to a nuclear settlement.
Despite the confrontation, Trump told an ABC News reporter the Strait of Hormuz ceasefire remained intact. He reportedly described the exchange as “just a love tap.”
Trump also paused “Operation Freedom,” a U.S. naval mission designed to escort commercial shipping through the critical waterway after the ceasefire was announced.
Also Read: What the Strait of Hormuz Means for Global Oil Supply
Background: Ceasefire Already Under Strain
The ceasefire, struck after weeks of escalating U.S.-Iran military pressure, had faced repeated accusations of violations from both sides even before Friday’s incident. The Strait of Hormuz carries roughly one-fifth of the world’s traded oil, making any disruption there an immediate market concern. Iran was also reportedly weighing a formal U.S. proposal to end hostilities entirely, a process that now appears significantly more complicated.
Markets Brace for Prolonged Volatility
Analysts at ANZ Research warned that the risk of a proposed peace deal collapsing would likely keep oil markets turbulent in the near term. Separately, Citi analysts said broader financial markets could stabilize over time. However, the bank cautioned that the road to normalization remains uneven and that elevated oil prices may persist for months.
The competing signals from Washington leave traders navigating a market where diplomatic progress and military friction are unfolding simultaneously.
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