Oil futures faced pressure due to de-escalation signals, while American indices reacted with a decline

Brent oil prices experienced a significant decline on Friday trading, losing $1.89, or 2.4%, bringing the price to $76.96 per barrel. Despite a weekly gain of 3.8%, the quotes failed to sustain the impressive jump from the previous day. Futures on West Texas Intermediate for July contracts, resuming trading after Thursday’s break, added $0.53 (0.7%), settling at $75.67 per barrel.

Geopolitical Tension and Its Impact on the Energy Market

The previous trading day was marked by a sharp nearly 3% surge in oil futures prices, triggered by escalating conflict between Israel and Iran. Following an Israeli strike on targets in a neighboring country, Iran responded with missile and drone launches, raising traders’ concerns about the expansion of the geopolitical crisis. The price increase reflected the classic market reaction to threats of energy supply disruptions.

However, during Friday’s session, a US administration spokesperson announced that President Donald Trump would delay a decision on direct US military involvement for the next two weeks, slightly easing the situation. Phil Flynn from Price Futures Group commented: the oil market reacted with an increase due to fears of American intervention, but signals of potential negotiations and de-escalation slowed the previous rally.

Strategic Importance of Regional Energy Supply

Iran’s critical role in the global oil economy becomes evident when considering its production scale: the country extracts approximately 3.3 million barrels of crude daily, ranking third in OPEC. Even more impressive are the figures related to transportation through the Strait of Hormuz, located off Iran’s coast: this vital trade artery handles between 18 and 21 million barrels of oil and derivatives daily.

Traders and analysts rightly fear that further escalation of the conflict could seriously disrupt global energy supplies and reduce available reserves. This explains the increased volatility of oil futures in recent days.

Stock Market Reaction and Tactical Policy Calculations

US indices showed a synchronized decline on Thursday evening. Dow futures lost more than 0.4%, while the S&P 500 and Nasdaq 100 fell approximately 0.3%. Investors assessed the prospects of possible US involvement in the regional conflict and the two-week period set by the President for making a final decision.

Toni Sikamor, an analyst at IG, offered an interesting perspective on Trump’s strategy: the “two-week period” is a tactical tool used by the president in other key decisions. Historically, such periods often expire without specific actions, allowing crude oil prices to remain elevated and accumulate recent gains.

Impact of Monetary Policy and Powell’s Criticism

Against the backdrop of geopolitical events, markets also digested statements by Federal Reserve Chair Jerome Powell. After the Fed left the key rate unchanged on Wednesday, Powell emphasized that policymakers are not rushing to cut rates and will be guided by incoming economic data. According to CME Group data, most traders expect rate cuts at the September Federal Reserve meeting.

President Trump resumed public criticism of Fed Chair Powell on Thursday, accusing him of costing the US economy “hundreds of billions of dollars” due to tight monetary policy. The president added a personal attack, describing Powell as “one of the most unsuccessful and destructive figures in government.”

Thus, oil futures and stock markets remain influenced by the interplay of geopolitical threats, monetary expectations, and political decisions, creating a complex landscape of uncertainty for investors.