Oil Slides to Weekly Loss as Iran Deal Prospects Dim

Oil prices retreated on Friday, ending a two-week rally that had lifted the market higher just a day earlier. Brent crude fell 25 cents to $89.45 a barrel, while West Texas Intermediate dropped 22 cents to $83.31—both declines of 0.3%. More significantly, both benchmarks were tracking toward weekly losses: Brent down 5.3% and WTI down 4.3% as the week closed.

The pullback came despite geopolitical tensions that might ordinarily have supported prices. On Thursday, the Trump administration made clear it was not engaged in talks with Iran, despite diplomatic efforts by other nations to restart negotiations. More pointedly, according to people familiar with the matter cited by the Wall Street Journal, the administration had repeatedly told mediators it had no interest in reviving the June memorandum of understanding that had previously governed U.S.-Iran relations. That explicit rejection complicated ongoing diplomatic efforts and signaled a harder line than markets had anticipated.

The messaging shift was notable because it undercut the price support that had emerged earlier in the week. On Monday, the U.S. had announced what it described as the "toughest sanctions in history" against Iran—a move that had initially buoyed oil futures. Tehran dismissed the sanctions as an "inhumane and hostile act" and claimed they had lost their effectiveness. The market had absorbed those sanctions as a potential supply constraint. But the administration's subsequent signal that it was not pursuing a diplomatic off-ramp suggested the sanctions were meant as punishment rather than leverage, a distinction that apparently mattered to traders.

Elsewhere, geopolitical risk remained elevated. Russia warned it could strike British military targets both inside and outside Ukraine in response to Kyiv's use of British-supplied long-range cruise missiles against Russian territory. The escalation raised questions about whether the conflict might draw NATO members into direct confrontation with Moscow. Britain, as a founding NATO member, would be directly implicated in any such scenario.

Yet even this threat did not sustain oil's upward momentum. President Trump offered reassurance that Russian President Vladimir Putin would not attack a NATO country, and he downplayed reports that CIA Director John Ratcliffe had warned Russian officials against such an attack. That message—that the geopolitical risk premium might be overstated—appeared to weigh on prices as traders reassessed the likelihood of supply disruptions. The result was a market caught between conflicting signals: explicit hostility toward Iran, escalating Russia-NATO tensions, and presidential reassurance that the worst-case scenario was unlikely. Oil prices reflected that uncertainty by retreating.