Oil prices extended their losses on Thursday, sliding approximately 2% to fall below $100 a barrel. This drop was fueled by renewed optimism for a potential U.S.-Iran peace deal, which could lead to a gradual reopening of the Strait of Hormuz.
Brent crude futures decreased by $1.95, or 1.93%, reaching $99.32 a barrel by 0912 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) fell $1.93, or 2.03%, to $93.15.
Thursday’s trading session proved volatile, with Brent crude fluctuating significantly, trading within a range of up 1% to down 3.8% compared to its previous close. Both key benchmarks had already slumped over 7% on Wednesday, hitting two-week lows amidst growing hopes for an end to the conflict in the Middle East.
The decline in prices continued into Thursday as investors reacted to fresh reports suggesting progress towards potential peace talks. Analysts highlighted a report from Saudi Arabia’s Al Arabiya news channel, indicating that understandings have been reached to ease the U.S. blockade in exchange for a gradual reopening of the Strait of Hormuz. Another report, from Israel’s Channel 12, alleged that Iran had agreed to transfer its stockpile of 60% enriched uranium to a third country. Reuters could not immediately verify the details of either report.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, commented, “From a broader perspective, oil markets have remained stuck between diplomacy and disruption for more than two months, with investors’ emotions being manipulated by headlines almost daily.” She added, “If a formal deal eventually materializes, oil prices could witness a free fall as geopolitical premiums rapidly evaporate from the market. However, any fresh signs of attacks on oil infrastructure or escalation in the Middle East could easily trigger another parabolic spike in crude prices.”
Iran had stated on Wednesday that it was reviewing a U.S. peace proposal. Sources indicated this proposal would formally end the war while leaving unresolved key U.S. demands for Iran to suspend its nuclear program and reopen the Strait of Hormuz.
Earlier in the week, U.S. Treasury Secretary Scott Bessent urged China to intensify its diplomatic efforts to persuade Iran to open the Strait of Hormuz to international shipping. He noted that President Donald Trump and Chinese counterpart Xi Jinping are expected to discuss the matter during their meeting next week.
Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, remarked, “While peace negotiations are likely to continue at least until next week’s U.S.-China summit, the outlook beyond that remains uncertain.”
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