U.K. energy equities weakened on Friday as oil prices slid amid renewed hopes that Washington and Tehran could reach a peace agreement. The prospect of an imminent deal followed remarks from U.S. President Donald Trump indicating a signing could occur very soon, a development that sent crude futures lower and pressured London-listed energy names.
On the futures market, WTI crude for July delivery fell about 4% to $84.20 a barrel, while August Brent futures dropped 3.7% to $87.07. The decline in oil prices translated into losses for British energy companies: by 08:13 GMT, BP had fallen about 3.7% and Shell was down roughly 2.6%.
Smaller and diversified producers also moved lower. Diversified Energy and Ithaca Energy each slipped more than 4%, and Harbour Energy declined around 3.8% as commodity weakness weighed on the sector.
Speaking from the Oval Office on Thursday, President Trump said he expected an agreement within days and that the Strait of Hormuz - largely closed to shipping since Iran's actions early in the conflict - would reopen once a deal was finalized. "The strait will officially open as soon as we sign, which could be soon, very soon, maybe over the weekend in Europe," he said, and added that Vice President JD Vance would attend the signing.
Trump also said he had called off a planned round of U.S. military strikes against Iran, asserting that negotiations had been "brought to the highest level of Iranian leadership and approved." He described a potential deal as the most significant diplomatic breakthrough in the three-month-old war. When asked whether Supreme Leader Ayatollah Mojtaba Khamenei had personally approved an agreement, Trump told reporters: "I understand the answer is yes."
However, Tehran disputed that account. State-affiliated outlet Fars reported that Iran had not approved any draft text for an initial memorandum of understanding with Washington.
The president has made similar statements several times since mid-March without a deal materializing, and the two sides exchanged strikes as recently as this week, which strained a ceasefire that was reached in April. Those dynamics appear to have left markets sensitive to competing narratives from Washington and Tehran and to swings in risk sentiment tied to the conflict.
Market reaction snapshot:
- WTI (July) - down about 4% to $84.20 per barrel
- Brent (August) - down 3.7% to $87.07 per barrel
- BP - down roughly 3.7% by 08:13 GMT
- Shell - down roughly 2.6% by 08:13 GMT
- Diversified Energy and Ithaca Energy - fell more than 4% each
- Harbour Energy - fell approximately 3.8%
The fall in crude futures and the shares of energy companies highlights how closely valuations in the sector remain tied to geopolitical developments and statements from political leaders. With competing reports from Washington and Tehran, markets have displayed heightened sensitivity to any news that could alter expectations for supply disruptions or the reopening of key shipping lanes.