Oil Plunges, Dollar Weakens on Hormuz Deal Hopes
Crude oil prices fell to their lowest level in more than two weeks, while the US dollar weakened, amid expectations that a deal to reopen the Strait of Hormuz and restore energy supplies could be closer. The decline in oil also eased inflation concerns that had been rising as conflicts in the Middle East pushed up energy prices.
Brent crude fell more than 4.5% to around US$98.80 per barrel, while WTI weakened 4.5% to US$92.22 per barrel. At the same time, the dollar weakened against most G-10 currencies, spot gold rose 1.4% to US$4,570.92 per ounce, and Asian stocks rallied, reflecting improved risk sentiment as markets assessed a deal could help re-establish energy flows through the vital waterway.
A senior US official said Sunday that the US and Iran were close to a deal to open the Strait of Hormuz, although negotiations on key language were ongoing and a final agreement could take several days. From Iran's side, Tasnim news agency warned that the draft agreement still has the potential to fail, with the US claiming it is blocking several key clauses, including Tehran's demand that its assets be re-closed.
This improvement in sentiment comes after several weeks of deadlock following the April ceasefire. Market participants had previously been watching the economic impact of the Middle East conflict, which boosted oil prices and inflation, pushing bond yields to multi-year highs. US Treasury futures rose (cash trading was closed due to a US holiday), Japanese bond yields fell briefly, and S&P 500 futures rose 0.6% after the benchmark index recorded eight consecutive weeks of gains, its longest streak since 2023.
Looking ahead, the market awaits US PCE data and the release of inflation in Europe, after rising yields fueled speculation that central banks might need to raise interest rates. Market participants also believe that oil volatility has the potential to persist: although signs of ships beginning to return to Hormuz, including reports of dozens of vessels receiving authorization and a supertanker carrying Iraqi oil to China bypassing the US blockade, the still-fluid negotiation process and unresolved differences keep energy supply and price direction sensitive to headline developments. (asd)*
Source: Newsmaker.id
