Brent crude fell 11% to $97 a barrel after President Donald Trump said he was close to a peace deal with Iran. It was the first time the benchmark had traded below $100 since late April.
Trump’s message, posted on social media, held out a simple trade: if Tehran agrees to a deal with Washington, the long conflict ends and the Strait of Hormuz opens to free passage. He wrote that an agreement could bring an end to “Epic Fury” and let the “highly effective Blockade” allow ships through. If there is no deal, he warned, the military action would intensify beyond earlier levels.
Why Hormuz matters
About 20% of the world’s oil supply moves through the strait, and Iran has held it under blockade since late February. That triggered an international energy crisis. Trump had just declared a temporary halt to “Project Freedom,” the operation that escorted ships through the waterway. The blockade of Iranian ports continues, but Trump said he was confident of reaching a resolution.
Iran’s Revolutionary Guards Navy offered an assurance of safe passage through the strait and spoke of procedural adjustments as US threats eased. It did not spell out the new procedures, though it thanked shipowners and captains for following Iranian regulations.
Markets react
Early Wednesday the slide in crude picked up speed on reports that the White House was nearing a one-page memorandum of understanding with Iran to stop hostilities. Several sources, including US officials, backed those reports. The paper is seen as a first step toward detailed nuclear talks.
The relief was partly undone later in the day. Iranian officials called the US proposal an “American wishlist,” and oil crept back to $101.83 a barrel. A week earlier it had surged to $126, after Trump said the blockade of Iranian ports might last for months while peace talks stalled.
Wholesale gas in Britain followed crude lower, with the June contract down 6.3%. Airline shares gained on better prospects for international travel.
Stocks rallied broadly. The UK’s FTSE 100 rose 2%, France’s Cac 40 gained 3% and Germany’s Dax added 2.1%. MSCI’s All-Country World Index climbed 1.6% to a new high. The broadest index of Asia Pacific shares outside Japan rose 2.5%.
Sources
Sources
- Oil prices drop amid potential Iran deal to ensure… – KYODO NEWS
- Crude Oil Prices Today | OilPrice.com
