Oil Prices Drop as Iran Responds to Draft Peace Agreement
International oil prices fell sharply in early Asian trading on Friday following a report that Iran has sent a response to U.S. amendments on a draft peace agreement, mediated through Pakistan — marking the strongest signal yet of a potential de-escalation in the U.S.-Iran conflict.
U.S. WTI crude futures fell more than 2% to $102.45 per barrel by 8:24 a.m. ET, while international benchmark Brent crude edged 0.83% lower to $109.48 per barrel. Brent briefly dipped below the psychological $110 mark for the first time in weeks.
War Powers Resolution Deadline Looms
The oil price move comes as President Donald Trump faces a 60-day congressional authorization deadline under the War Powers Resolution for military action against Iran. Under the 1973 law, a president must withdraw troops within 60 days of notifying Congress unless lawmakers authorize continued operations — which Congress has not done.
The Trump administration argued on Friday that a ceasefire reached three weeks ago has “terminated” hostilities between the two sides. An administration official told MSNow that the absence of direct fire between U.S. forces and Iran since the ceasefire was first agreed to on April 7 means the 60-day clock no longer applies.
“For War Powers Resolution purposes, the hostilities that began on Saturday, February 28, have terminated,” the official said.
Hegseth Testifies Before Congress
Defense Secretary Pete Hegseth first raised this argument during his Thursday hearing before the House Armed Services Committee, stating that the ceasefire had effectively paused the war. His testimony came as growing numbers of Republican lawmakers have begun to break ranks, demanding accountability for the increasingly unpopular conflict.
Recent polling from ABC News/Washington Post/Ipsos shows that a majority of Americans now consider military action against Iran a mistake, with disapproval levels reaching those seen during the Iraq and Vietnam wars.
Strait of Hormuz Remains Key Variable
Despite the positive signals from peace talks, shipping restrictions through the Strait of Hormuz remain in place. The critical waterway handles approximately 20% of global oil supply and has been a focal point of market anxiety since the conflict began.
Yara International previously warned that the Hormuz closure’s disruption to fertilizer supplies could cost the world up to 10 billion meals per week. Fertilizer prices have surged 80% since the conflict, with some regions facing potential crop yield reductions of 50%.
Market Outlook
Analysts suggest that if Iran’s response includes substantive concessions, oil prices could fall further. However, if the response is deemed too hardline, prices may quickly reverse their declines after a brief pullback.
Brent crude has now fallen more than 13% from its conflict-driven peak of $126.41 per barrel, but remains roughly 40% above pre-conflict levels. Markets are awaiting further details from the negotiations.