Oil prices slide as US-Iran deal hopes shake markets
US-Iran negotiations give cause for optimism (Photo: Getty Images)
On Monday, oil prices hit a two-week low amid optimism that the US and Iran are nearing a peace deal, according to CNN and Reuters.
In particular, Brent crude oil futures fell by $4.71 (4.55%) to $93.83 per barrel. This occurred by 22:34 GMT.
At the same time, US West Texas Intermediate crude fell by $4.57 (4.73%) to $92.03 per barrel.
The drop in oil prices comes amid US-Iran negotiations on a deal that would include reopening the Strait of Hormuz, which has remained closed to oil shipments since the very beginning of the war — February 28. Before the attacks, about 20% of all oil shipments passed through this maritime route.
"Notwithstanding all the caveats and risks that remain to the peace deal and Strait of Hormuz, there is now some light at the end of the tunnel, which will bring some near-term oil price relief," said MST Marquee analyst Saul Kavonic.
Reuters, citing analysts, reports that it will take several months to restore normal oil flow through the strait and to repair damaged oil and gas facilities.
CNN, meanwhile, noted the position of JPMorgan analysts. They expect the average oil price to be $97 per barrel through the end of the year if the strait is opened in early June.
Possible deal between the US and Iran
Less than a day ago, Fox News reported that US President Donald Trump had set a deadline of up to seven days for Washington and Iran to reach a framework agreement to end the war. By Sunday evening, the memorandum was already 95% agreed.
The document the parties are working on is primarily intended to end the war. It provides for the opening of the Strait of Hormuz.
If an agreement is reached, the parties will then have 30–60 days to finalise a definitive document to end the war. It is during these negotiations that the US and Iran will discuss one of the most important issues — Iran's nuclear program.
