Oil prices slide after US comments on Iran peace deal
Photo: Oil prices plummet following US statements on peace with Iran (Getty Images)
Global oil prices plummeted today to their lowest level since March 10. Markets reacted to the prospect of an end to the conflict between the US and Iran, according to Reuters.
How much did prices fall?
Brent crude futures fell by $4.08, or 4.7%, to $83.25 per barrel, while US West Texas Intermediate crude fell by $4.35, or 5.1%, to $80.53.
Prices for both grades of crude fell on Monday, June 15, to their lowest level since March 10, adding to a more than 3% drop on June 12.
Why prices fell
US President Donald Trump stated that the Strait of Hormuz would remain open to shipping and that the US naval blockade of Iranian ports would end.
At the same time, Pakistani Prime Minister Shehbaz Sharif announced that the US and Iran plan to sign a memorandum of understanding in Switzerland on June 19.
What's next
Investors are also assessing the pace of recovery in oil production and exports by Middle East countries following war-related damage, as well as the prospects for the return of shipping to the region.
The United Kingdom, France, Germany, and Italy have stated they are prepared to lift sanctions against Iran in response to steps regarding its nuclear program.
"The damage already done cannot be reversed overnight. This includes not only any physical damage to oil infrastructure but also the economic strain endured by oil importing economies that have faced elevated energy costs for months," says Priyanka Sachdeva, senior market analyst at Phillip Nova.
US-Iran memorandum
Earlier, US President Donald Trump announced that an agreement had been reached between the US and Iran.
According to him, the agreement provides for the opening of the Strait of Hormuz, the lifting of the naval blockade by the US Navy, and Tehran’s renunciation of the development and acquisition of nuclear weapons.
Initially, Western media reported that the agreement was planned to be signed remotely, primarily due to logistical difficulties.
However, the Iranian Ministry of Foreign Affairs later denied reports that the document would be signed on Sunday.
Tehran stated that the final date for the ceremony had not yet been determined, although they did not rule out the possibility that it could take place in the near future.
Today, Pakistani Foreign Minister Ishaq Dar announced that the signing ceremony for the peace agreement between the U.S. and Iran is scheduled for June 19 in Geneva, Switzerland.
