Oil Prices Plummet Amid Hopes for a US-Iran Deal
World oil prices plummeted to their lowest level in two weeks on Wednesday (May 6), following news that the United States and Iran were closer to reaching a preliminary agreement to end the conflict. This sentiment immediately reduced the geopolitical risk premium that had previously driven oil prices soaring.
Brent crude futures fell 6.07%, or US$6.67, to US$103.20 per barrel, after briefly falling below US$100 for the first time since April 22. Meanwhile, WTI crude oil weakened 6.2%, or US$6.34, to US$95.93 per barrel.
A Pakistani source acting as a mediator said Washington and Tehran were nearing an agreement in the form of a one-page memorandum. The Axios report also stated that the US was awaiting Iran's response to several key points in the next 48 hours, although Iran had previously asserted that it would only accept a fair and comprehensive agreement.
The decline in oil prices eased after US President Donald Trump said it was too early to consider direct talks with Tehran. On the other hand, a senior Iranian lawmaker called the US proposal more of a wish list than a concrete deal.
Previously, the disruption of shipping traffic in the Strait of Hormuz since the war began in February disrupted global oil supplies and pushed Brent crude to its highest level since March 2022. The closure of the waterway also led to a decline in global oil and fuel stocks as refineries struggled to fill the supply gap.
Despite the drop in oil prices, US inventory data shows that the energy market remains tight. The American Petroleum Institute reported that US crude oil stocks fell by 8.1 million barrels in the week ending May 1. Gasoline inventories also fell by 6.1 million barrels, while distillate stocks fell by 4.6 million barrels.
Source: Newsmaker.id
