Oil prices continued their downward trend on Thursday, falling approximately 2% to below $100 a barrel, driven by renewed optimism for a potential U.S.-Iran peace agreement. Such a deal could pave the way for a gradual reopening of the critical Strait of Hormuz, a key shipping route for global oil supplies.
Brent crude futures saw a decline of $1.95, or 1.93%, settling at $99.32 a barrel by 0912 GMT. Similarly, U.S. West Texas Intermediate (WTI) dropped $1.93, or 2.03%, to $93.15. The trading session proved volatile, with Brent experiencing fluctuations from a 1% gain to a 3.8% loss compared to its previous close.
Both major benchmarks had already experienced significant losses on Wednesday, plummeting over 7% to reach two-week lows amidst growing hopes for an end to the conflict in the Middle East. The decline persisted into Thursday as investors reacted positively to fresh reports indicating progress toward potential peace negotiations.
Among the key developments, Saudi Arabia’s Al Arabiya news channel reported that understandings had been reached to ease the U.S. blockade in exchange for a gradual reopening of the Strait of Hormuz. Additionally, Israel’s Channel 12 claimed that Iran had allegedly agreed to transfer its stockpile of 60% enriched uranium to a third country. Reuters, however, stated it could not immediately verify either report.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, commented on the situation, noting, “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 further cautioned that “If a formal deal eventually materialises, 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 indicated on Wednesday that it was reviewing a U.S. peace proposal. Sources suggested this proposal aimed to formally end the war, although it reportedly left unresolved key U.S. demands regarding Iran’s nuclear program and the reopening of 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 added that President Donald Trump and Chinese President Xi Jinping were 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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