Global oil prices dropped sharply on Monday, reaching their lowest levels in two weeks, after renewed optimism emerged over a possible peace agreement between the United States and Iran.
According to Reuters, Brent crude futures fell by $4.44, or 4.3 percent, to $99.10 per barrel by 0822 GMT. Meanwhile, US West Texas Intermediate (WTI) crude declined by $4.36, or 4.5 percent, to $92.24 per barrel. Both benchmarks earlier touched their lowest levels since May 7.
The decline followed comments by US President Donald Trump, who said on Saturday that discussions between Washington and Tehran regarding a peace agreement were “more or less negotiated or finalized.” Trump suggested that such a deal could lead to the reopening of the strategically vital Strait of Hormuz.
Before the recent conflict, nearly one-fifth of the world’s oil and liquefied natural gas (LNG) supplies passed through the Strait of Hormuz, making it one of the world’s most important energy transit routes.
Despite the optimism, major differences remain between the two sides. Trump said on Sunday that he had instructed his representatives not to rush into any agreement.
Warren Patterson, head of commodities strategy at ING, warned that markets were being cautious after previous negotiations collapsed at the final stage.
“We have been here before, and talks have fallen apart at the last minute,” Patterson said, adding that investors are likely to remain careful about overreacting.
Both countries also appeared to tone down expectations of an imminent breakthrough. US Secretary of State Marco Rubio said Washington would either secure a “good deal” or deal with Iran “through other means.”
Meanwhile, Iranian Foreign Ministry spokesperson Esmail Baghaei stated that Tehran’s current focus is on ending the war and that nuclear issues are not presently part of the discussions.
