Oil prices fell on Friday as the U.S. unveiled new Iran-related sanctions, signaling a diplomatic tack that calmed fears of an imminent escalation in the Israel-Iran conflict. Brent crude settled down $1.84, or 2.33%, at $77.01 a barrel, while U.S. West Texas Intermediate crude for July dropped 21 cents, or 0.28%, to $74.93. The more actively traded August WTI contract closed at $73.84. Despite the daily dip, Brent rose 3.6% on the week, and WTI gained 2.7%.
The U.S. Treasury announced sanctions on more than 20 entities and several individuals, including targets in Hong Kong, aimed at curbing Iran’s influence through non-military means. Analysts viewed the move as a possible sign the U.S. is seeking to resolve tensions through negotiation rather than immediate military action. This came a day after President Trump indicated he might take up to two weeks to decide whether to join Israel’s military campaign.
Oil prices had surged nearly 3% on Thursday after Israel struck Iranian nuclear facilities and Iran launched retaliatory missile attacks. Though both sides have so far avoided damaging key oil infrastructure, analysts warn the situation remains volatile. Any disruption to oil flows through the Strait of Hormuz, a chokepoint for about 20% of global oil, could still push crude toward $100 a barrel.
Analysts also noted that while supply remains unaffected, the direction of oil prices hinges on whether the conflict escalates further. UBS’s Giovanni Staunovo said there is currently no shortage, but prices would respond quickly to any real threat to infrastructure or shipping lanes.