Brent crude fell nearly 2% at the open to as low as $88.79 per barrel after settling at a two-month low in the previous session. US West Texas Intermediate (WTI) crude traded near $86 a barrel.
The latest decline came after a 2.5% rise in Brent crude oil on Thursday morning, crossing $95 a barrel after fresh US military strikes on Iran earlier.
Trump had initially threatened further attacks and action against Iran’s oil infrastructure before later saying a deal was close, although Tehran has not confirmed any agreement.
According to media reports, Iran has not yet approved any draft agreement with the United States. The US military carried out a second day of strikes on Iran on Thursday after Trump accused Tehran of delaying negotiations over an interim peace arrangement.
Markets are increasingly focusing on the possibility of a diplomatic resolution to the conflict, which has disrupted oil flows through the Strait of Hormuz, a key route for global crude, fuel and natural gas shipments.
Trump said a potential agreement would include commitments from Iran not to pursue nuclear weapons and would pave the way for shipping to resume through the Strait of Hormuz.
However, even if an agreement is reached, the full normalisation of oil flows could take time due to damaged energy infrastructure, shut-in production and security risks in the region.
Some tankers have resumed leaving the Persian Gulf through the Strait of Hormuz, although global oil inventories continue to tighten. Fuel stockpiles in Singapore have fallen to their lowest level since 2013, while US crude inventories have declined sharply over the past several weeks.
Brent crude for August delivery was trading around $89 a barrel in Asian trade, while WTI futures were near $86.30 a barrel.
With inputs from Bloomberg
