US-Iran tensions remain the main focus for markets, and that has changed little since the start of the week. As noted earlier, Middle East tensions remain heightened with the weekend drawing closer.

After four days of dealing with increasingly cautious headlines, however, market conditions on Friday are showing signs of a modest breather, at least for now. For energy markets, the geopolitical backdrop matters because any perceived risk to supply flows from the Middle East can quickly feed into crude pricing, even when the immediate trading move is driven by positioning or technical levels.

Oil prices are moving lower and coming off recent highs, with WTI crude down 3% on the day and falling back below $90 a barrel. WTI is the main US crude benchmark, so its move is closely watched not only by energy traders but also by investors tracking inflation-sensitive assets.

WTI crude oil daily chart ($/bbl)

The chart remains important to watch, as price action is now being drawn back toward a test of the 100-day moving average, marked by the red line. If WTI holds above that level, the more bullish momentum gained on Thursday would remain intact. If it falls below that key technical area, sellers may have room to push prices back a little further. The closing level on Friday, whether above or below $90, is also likely to be a point of attention.

Even with Friday’s pullback, oil prices are still on track for another strong week, which would mark a third consecutive weekly gain. After rising by more than 14% last week, WTI crude is still positioned to finish the current week more than 9% higher at prevailing levels.

Across broader markets, the retreat in oil prices is also allowing other asset classes to find some relief. Bond yields are easing from their highs, with the 10-year Treasury yield down 1.2 basis points to 4.69%. In Europe, Germany’s 10-year yield has moved down from 3.20% to 3.185%, while France’s 10-year yield has declined from 4.035% to 3.988%. Lower oil prices can reduce some near-term pressure on inflation expectations, which helps explain why rates markets remain sensitive to swings in crude during periods of geopolitical stress.

Equities are also finding some support, with major European indices posting slight gains and S&P 500 futures up 0.3% on the day. Wall Street had a difficult session on Thursday, and while technology shares are still on course for another weekly loss, the latest moves offer some breathing room ahead of the US market open.

That said, it remains early in the trading day, and it may not take much for market jitters to return. Any negative headline risk during the session ahead could quickly stir up renewed nerves, particularly with traders weighing exposure into the weekend when markets have less ability to react to fresh developments.