Brent Crude fell over 5% to slip below the mark of $100 for the first time this month, while US crude, or West Texas Intermediate (WTI) also fell by a similar quantum towards the mark of $90 a barrel.
Prices are down despite US President Donald Trump stating that the US blockade of the Strait of Hormuz will remain in place till a proper deal is signed and put in place. Senior US officials stated that any final deal may take days.
“A lot of oil was trading on worst case assumptions for weeks,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP. “But once it became clear talks were still alive and escalation wasn’t accelerating, a chunk of that fear premium comes out pretty fast.”
Reopening of the Strait of Hormuz will come as a major relief for many oil importers as over one-fifth of the global traffic passes through the Persian Gulf. Iran claims that over 33 ships passed through the Strait, but it will take at least a month for traffic to return to pre-war levels.
Kevin Hasset, White House’s Chief Economic Adviser told Fox News that he expects energy prices to drop once there is a deal, which could help the US Federal Reserve cut interest rates.
Trading in the oil markets may also be thin on Monday due to the public holidays in the US and the UK.
(With Inputs From Agencies)
