Oil Prices Drop 5% After Reports of Possible US-Iran Ceasefire Deal, Hit Two-Week Low
Islamabad: Global oil prices fell sharply after rising expectations of a ceasefire agreement between the United States and Iran, pushing benchmark crude prices to their lowest level in two weeks.
According to international media reports, Brent crude dropped by $5.04 to $98.50 per barrel, while West Texas Intermediate (WTI) crude declined by $4.82 to $91.78 per barrel. Both benchmarks hit their lowest levels since May 7, marking an overall decline of nearly 5 percent.
The decline comes amid reports suggesting progress toward a peace agreement between the US and Iran, which could potentially lead to the reopening of the Strait of Hormuz. A statement attributed to the US President indicated that a broad understanding had been reached on a potential deal, raising hopes for improved oil flow through the critical waterway.
Market sentiment was further influenced by expectations that easing tensions could restore global crude supply routes. The Strait of Hormuz is a vital chokepoint through which nearly 25 percent of the world’s oil and gas shipments pass. Any disruption in the route has historically led to sharp increases in oil prices and shipping costs.
Energy analysts, however, warned that even if negotiations progress, a full normalization of oil flows through the region could take several months due to potential damage to infrastructure and logistical disruptions.
Commodity analysts at Sparta Commodities noted that the global market is still facing a supply shortfall of more than 10 million barrels per day, keeping pressure on inventories until Middle Eastern production stabilizes.
Meanwhile, UBS analyst Giovanni Staunovo emphasized that actual physical supply flows remain the key driver of oil prices, stating that shipments through the Strait of Hormuz are still limited.
Shipping data showed that two LNG carriers departed through the Strait of Hormuz on Monday, heading toward Pakistan and China, while a large crude tanker carrying Iraqi oil, which had been stuck for nearly three months, recently resumed its voyage to China.
