Oil Slides Toward 86 Dollars as Washington and Tehran Signal a Deal, While Drones Still Fly in Hormuz

The price of oil is falling as the United States and Iran move toward ending the war that has gripped energy markets since the spring. Brent crude dropped more than 4 percent on Friday to below 86.50 dollars a barrel, its lowest since early March, according to trading data, as both governments said they had agreed on the final text of a 14-point draft memorandum of understanding (a written framework setting out each side's commitments).

The diplomacy then moved faster than the markets, which are closed over the weekend. President Donald Trump announced on Saturday that the agreement is "scheduled to get signed tomorrow, and immediately after it is signed, the Hormuz Strait is OPEN TO ALL." Iran's foreign ministry disputed the timing, with a spokesman saying the signing would "not be tomorrow" while adding that it could happen in the coming days. The draft would lift oil sanctions on Iran, release roughly 25 billion dollars in frozen Iranian assets, and reopen the Strait of Hormuz within 30 days under Iranian arrangements, with Pakistan and Qatar mediating, according to reporting compiled by Al Jazeera and Deutsche Welle. About a fifth of the world's seaborne oil passes through the strait, and its closure earlier this year pushed Brent above 140 dollars.

The fighting has not stopped. The United States military said it shot down several Iranian attack drones aimed at commercial vessels in Hormuz, and Trump accused Iran of striking Indian-linked ships, a charge Tehran rejected as baseless. Israeli media reported overnight explosions on the Iranian islands of Qeshm and Sirik tied to the clashes, and said a fifth round of Israeli-Lebanese talks is set for Washington on June 22.

Where the sources differ is on durability, and now on the calendar. Western and Gulf outlets frame the deal as close but reversible, while Iranian state media present Tehran as negotiating from strength after absorbing months of strikes, and the public gap between Trump and Tehran over when ink meets paper underscores how much can still go wrong, as CNBC noted. For markets, the move is one direction for now. As the geopolitical risk premium deflates, the dollar slipped and gold traded near 4,224 dollars an ounce, still far below its January record above 5,500 dollars, per price data. The Dow Jones Industrial Average rose about 900 points earlier in the week on the first deal signals.