Oil Prices Drop as US, Iran Signal Possible Peace Deal on Hormuz Strait
By Aboki Forex —
Oil prices fell on Wednesday as hopes grew for a peace deal between the United States and Iran, despite fresh tensions and uncertainty over the Strait of Hormuz. Brent crude dropped to near $96 a barrel after rising almost 4% on Tuesday. West Texas Intermediate traded around $90.
An Iranian official said indirect contacts with the US are ongoing. The official added that Iran’s stockpile of highly enriched uranium is not on the agenda for talks. US Secretary of State Marco Rubio warned that any peace pact would likely take a few days to finalize.
The Strait of Hormuz, a key waterway for global oil and liquefied natural gas, remains essentially shut. Both the US and Iran have blockaded the chokepoint. But on Tuesday, at least two non-Iranian supertankers exited the strait. It was the first time in a week that 4 million barrels of unsanctioned crude crossed Hormuz.
“The decline in prices came partly after US Secretary of State Marco Rubio said that an interim agreement is only a couple of days away,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “We should expect another nervous day. For now, however, the market will likely remain optimistic, assuming it is only a matter of time before the Strait of Hormuz reopens.”
In Europe, France’s finance minister told RMC Radio and BFM TV that the country is not worried about diesel, gasoline, or jet fuel supplies for the next two months. “Holiday trips will be fine,” he said.
In the US, President Donald Trump will convene his cabinet at the White House on Wednesday. The meeting was moved from Camp David due to weather. Key sticking points remain in talks with Iran, including Tehran’s $24 billion in frozen assets and its reluctance to allow free passage through the strait.
Elsewhere, Russia is weighing curbs on diesel exports, according to Interfax. Russia is a major exporter of the fuel.