Oil prices fall after a peace deal is reached between the U.S. and Iran — Reuters
Global oil prices plummeted by more than $4 on Monday, June 15, hitting their lowest level since early spring.
The sharp drop in oil prices was triggered by statements from official sources announcing the reaching of a preliminary agreement to cease hostilities and fully restore shipping through the strategic Strait of Hormuz.
Brent crude futures fell by $4.08, or 4.7%, to $83.25 per barrel, while U.S. West Texas Intermediate crude fell by $4.35, or 5.1%, to trade at $80.53.
A breakthrough in the negotiation process was achieved thanks to the diplomatic efforts of world leaders and Iranian Deputy Foreign Minister Kazem Gharibabadi.
U.S. President Donald Trump officially confirmed the lifting of the naval blockade of Iranian ports, paving the way for the stabilization of the global energy market.
Pakistan acted as a mediator in resolving the conflict, and the formal signing of a memorandum of understanding between Washington and Tehran is scheduled for Friday in Switzerland.
“The geopolitical risk premium that had been factored into the price of crude oil is now falling quite sharply as traders factor in the prospect of restored oil flows,” noted Tim Wotterer, chief market analyst at KCM Trade.
Energy sector experts are currently analyzing the ability of Middle Eastern exporters to quickly restore previous production and supply volumes following the damage.
To return the global market to pre-war levels of oversupply, it is sufficient to restore transit through the Strait of Hormuz to at least two-thirds of its former capacity.
An additional factor putting pressure on prices is the willingness of leading European nations—the United Kingdom, France, Germany, and Italy—to begin the process of lifting economic sanctions against Tehran.
“Although these uncertainties point to upside risks to our forecast for Brent crude futures, which are expected to reach $80 per barrel by year-end, it is worth noting that oil flows through the Strait of Hormuz need only reach 60–70% of pre-war levels to return oil markets to pre-war expectations of a supply surplus,” said Vivek Dhar, a commodities strategist at the Commonwealth Bank of Australia.
This was reported by Reuters.
Oil prices fell after Trump’s statement on Iran — Reuters
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