Oil Falls as U.S. Shifts to Negotiation and Delays Decision on Intervention in Iran-Israeli Conflict
Oil prices fell in Friday's trading on June 20, influenced by the announcement of new U.S. sanctions on Iran and statements from the White House indicating a delay in the decision to intervene militarily in the crisis between Israel and Iran, reinforcing diplomatic expectations.
Brent crude futures closed at $77.01 per barrel, down $1.84 (2.33%), despite weekly gains of 3.2%. Meanwhile, U.S. crude futures fell by 21 cents (0.28%) to $74.93, as the nearest delivery rose by 2.8%.
This decline followed the announcement by the U.S. Treasury Department of new sanctions targeting 20 entities, 5 individuals, and 3 vessels, including entities based in Hong Kong, according to a notice posted on the department's website.
John Kilduff, a partner at Again Capital in New York, described this move as a "double-edged sword," saying: "These sanctions may be part of a broader negotiating approach towards Iran. Their action indicates an attempt to resolve this issue away from conflict."
U.S. President Donald Trump announced that Washington's decision on intervention in the conflict may take two weeks, which analysts interpreted as a diplomatic signal.
Phil Flynn, an analyst at Price Futures, said: "Oil prices rose amid fears of possible increased U.S. intervention, but later White House statements indicated a chance to de-escalate."
Tony Sycamore, an analyst at "IG," also pointed out that Trump's two-week deadline resembles previous ones taken in other files, adding: "Such deadlines often end without decisive actions, which may push prices up again due to geopolitical concerns."
Iran is the third-largest oil producer in OPEC, with a daily production of around 3.3 million barrels, while 18 to 21 million barrels of oil and its derivatives pass through the Strait of Hormuz off its coast daily, raising concerns about supply disruptions in case of escalating conflict.
This decline comes after a previous 3% jump in prices on Thursday following Israeli strikes on Iranian nuclear targets and Tehran's response with missile and drone launches, in ongoing clashes for a week without signs of abating.
