Oil prices have plummeted amid a possible breakthrough in negotiations between the U.S. and Iran
Global oil prices plummeted by nearly 6% on Monday, May 25, hitting their lowest level in two weeks. This was driven by growing optimism surrounding a potential peace deal between the U.S. and Iran, which could help stabilize supplies through the Strait of Hormuz.
This was reported by Reuters.
Brent crude futures fell by $5.85, or 5.7%, to $97.69 per barrel.
U.S. West Texas Intermediate (WTI) crude lost $5.75, or 6%, and traded at $90.85 per barrel.
Both benchmark oil grades fell to their lowest levels since May 7.
On Saturday, U.S. President Donald Trump stated that Washington and Tehran had “largely reached” an understanding on a peace agreement that could help open the Strait of Hormuz to stable shipping.
MST Marquee analyst Sol Kavonik noted:
“Despite all the caveats and risks that remain regarding the peace agreement and the Strait of Hormuz, there is now a light at the end of the tunnel that will bring some short-term relief to oil prices.”
However, experts emphasize that serious disagreements remain between the parties. Moreover, Trump has already stated that he has instructed his team not to rush into any agreements with Tehran.
Warren Patterson, head of commodities strategy at ING, noted:
“We’ve been at this stage before, but the talks fell through. Therefore, the market will likely be more cautious about overreacting.”
Experts believe that even if an agreement is reached, it could take several months for supplies through the Strait of Hormuz to fully resume, as part of the oil infrastructure remains damaged.
Phillip Nova analyst Priyanka Sachdeva emphasized:
“The longer the crisis lasts, the more debatable it becomes whether world leaders truly want a swift end to the disruptions.”
Amid market volatility, U.S. energy companies have already begun increasing the number of drilling rigs for oil and gas production in response to the changing price situation.
On May 22, global oil prices rose, although the market is still on track for a weekly decline. Analysts attribute the situation to uncertainty surrounding negotiations between the U.S. and Iran, as well as risks to shipping through the Strait of Hormuz, which is one of the world’s key oil supply routes.
The market expects oil prices to rise to $100 per barrel, according to Bloomberg.
Global oil prices rose during trading on Thursday, May 21, partially offsetting the sharp drop from the previous day.
Russian oil is on the rise again, shifting the balance of the Russian Federation’s revenues
Oil prices rose amid expectations of a meeting between Donald Trump and Xi Jinping. Traders are focusing on possible signals regarding a resolution to the conflict with Iran, which has affected global oil supplies.
