Oil prices retreated on Friday after US President Donald Trump extended the timeline for possible action against Iran's energy infrastructure, giving markets a brief breather after days of sharp gains. Brent crude slipped to below $106 a barrel, while West Texas Intermediate was near $94 a barrel in early trade. The pullback came after a massive run-up in prices, with Brent having surged more than 45% so far this month.
The immediate trigger was Trump's decision to allow Tehran 10 days instead of seven, stretching the revised deadline to April 6. For traders, that reduces the odds of an immediate escalation — but only for now.
The market reaction reflects a familiar pattern: any sign of more time for diplomacy tends to cool prices in the short term, even if the broader threat remains unresolved. Trump's move gives room for negotiations to continue, while also allowing the US more time to strengthen its military posture in the region.
That matters because the war has already upended energy flows across the Middle East. Iran's near-complete closure of the Strait of Hormuz, one of the world's most important oil chokepoints, has sharply restricted the passage of crude and fuel cargoes vital to the global economy.
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Hormuz Remains The Market's Biggest Worry
Before the conflict began in late February, the strait handled about a fifth of global oil flows. Even now, with traffic still heavily constrained, there are signs of limited movement returning. Trump said Iran had permitted 10 oil tankers to pass through as a goodwill gesture, while US officials also signalled that a new insurance support program for shippers may be rolled out soon.
Still, the larger concern is duration. Analysts at Macquarie say a prolonged conflict lasting into late June remains a real possibility, with that scenario potentially driving oil as high as $200 a barrel.
The jump in crude and refined fuel prices is now feeding into wider economic anxieties. Higher diesel and jet fuel costs are adding strain for businesses and households, while US Federal Reserve officials have begun flagging fresh inflation risks.
ALSO READ: Trump Warns Iran To Get Serious Soon' On Negotiations To End War
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