Oil prices declined during Asian trading hours on Friday, continuing a drop from the previous session. The decrease followed a statement from U.S. President Donald Trump late Thursday suggesting a reduced immediate threat of American strikes on Iran, which alleviated market worries about potential supply disruptions.
At 0418 GMT, Brent crude was down 21 cents, or 0.3%, to $63.55 per barrel. U.S. West Texas Intermediate crude fell 15 cents, or 0.3%, to $59.04 per barrel.
Both benchmarks had reached multi-month highs earlier in the week. This surge occurred amid protests in Iran and after President Trump signaled potential military action against the country. Brent prices are still on track for a fourth consecutive weekly gain.
In his Thursday remarks, Trump noted that Tehran's crackdown on protesters was easing. This comment helped calm fears of a conflict that could interrupt oil flows from the region.
Analysts from BMI stated in a note that Brent prices have retreated from their earlier peaks but remain higher than levels seen a week ago. They attributed the price decline directly to Trump's indication that he would hold off on military strikes.
"Given the potential political upheaval in Iran, oil prices are likely to experience greater volatility as markets digest the potential for supply disruptions," the BMI analysts said.
Market sentiment remains bearish regarding longer-term supply prospects for this year, despite earlier OPEC forecasts of a balanced market.
"Sentiment is driving markets, but the impact of headlines is always short-lived, especially when fundamentals look comfortable in the backseat," said Phillip Nova senior market analyst Priyanka Sachdeva.
She added, "Despite the steady drumbeat of geopolitical risks and macro speculation, the underlying balance still points to ample supply ... unless we see a genuine revival in Chinese demand or a meaningful bottleneck in physical barrel flows, oil looks range-bound, with Brent broadly hovering between $57 and $67."
On Wednesday, OPEC stated that oil supply and demand would remain balanced in 2026. The organization projected demand growth in 2027 at a pace similar to this year's.
Separately, oil giant Shell released its 2026 Energy Security Scenarios on Thursday. The report presented a bullish outlook for energy demand and oil growth, estimating that primary energy demand by 2050 could be 25% higher than last year.