Oil tumbles below $85 as Trump halts Iran strikes, claims peace deal is near

Market plunge on peace overture

Oil prices slid on Friday after Donald Trump called off further military strikes on Iran and insisted a peace deal was close. The front-month Brent contract fell as much as nearly 5%, dipping below $85 a barrel before recovering to around $87.50, a decline of about 3% on the day. Trump’s post on social media late Thursday said talks with Tehran had progressed and that a deal could lead to the reopening of the Strait of Hormuz this weekend. Iran stated that while large parts of the agreement had been finalised, a final decision had not been made.

Headlines are driving the market once again, as confidence grows that an eventual deal will be struck and the strait reopens.

Investors flee a chaotic market

Behind the short-term price swings lies a deeper exodus. Open interest in Brent crude futures has fallen 17% this year, the steepest decline since at least 2009, according to LSEG data. The front-month August 2026 contract registered just 534,227 lots at the start of June, the lowest since it became the most-active contract last July. Traders describe a market exhausted by Trump’s pattern of ratcheting up threats to Iran and then signalling de‑escalation hours later.

Policy uncertainty has made oil too volatile to hold.

A senior executive at a major trading desk, speaking anonymously, said: “People are exhausted by this chaos. They want this to be over. You cannot trade futures without being constantly burned in an environment when the messaging changes every other hour.”

Supply shortfall less severe than first feared

When Iran declared the Strait of Hormuz closed, analysts initially assumed almost all non-Iranian Gulf exports (12 million to 15 million barrels a day) were lost. Brent surged to nearly $120 a barrel in early March. Yet evidence has emerged that millions of barrels are still getting out. Shipping data firm Kpler estimated that 136 million barrels of non-Iranian crude moved through Hormuz and Gulf of Oman channels from early April to June 10, about 1.9 million barrels per day.

Iraq, Kuwait and the UAE have been exporting large volumes in tankers with their satellite systems turned off, sometimes in arrangements with Iran and sometimes without. Saudi Arabia has been shipping 4 million to 5 million barrels per day from its Red Sea port of Yanbu since March. The International Energy Agency’s latest report put the Gulf supply loss at 14 million barrels per day, but sources at two major trading houses say internal calculations point to a figure closer to 5 million to 6 million barrels per day.

Trump said on June 10 that over 100 million barrels had passed through the strait as part of what he described as a secret U.S. mission to support tankers.

Broader market reaction

U.S. futures and global equity markets rose in early European trading. Gold gained and bitcoin fell. Chris Beauchamp, chief market analyst at IG, said that a deal reopening Hormuz “would provide the perfect boost for a stock market rally that was beginning to look more than a little tired.” Goldman Sachs still expects oil to average $90 a barrel in the fourth quarter, as flows slowly recover.