Oil Prices Drop Amid Hopes of an Iran-US Deal
Oil prices fell more than 2% on Friday (May 29th) and closed the week with their deepest decline since early April, as market participants awaited confirmation that the US, Israel, and Iran had indeed reached a ceasefire agreement.
Brent's July contract, expiring Friday, closed at US$92.05 per barrel, down US$1.66 (1.8%), while WTI closed at US$87.36, down US$1.54 (1.7%).
Some market participants believe current prices reflect confidence that the ceasefire will hold. However, the narrative on the ground remains multifaceted, as the three-month US-Iran war has repeatedly been fueled by rumors of an "end to the conflict" that have triggered sharp volatility, particularly regarding the Strait of Hormuz, which normally carries about a fifth of the world's oil and gas supplies.
Different interpretations of Hormuz remain a crucial sticking point. The Fars news agency said the deal—which Iran has not yet decided to accept—requires the strait to be opened without restrictions, but that Iran will open it according to "its own established arrangements." Iran also previously stated that it would regulate traffic and collect transit fees after the conflict.
For its part, US President Donald Trump has renewed calls for Iran to immediately open the Strait. The closure of Hormuz has driven energy prices up sharply globally, and recent sessions have been marked by extreme fluctuations—with intraday ranges reaching around US$6—as the market reacts to conflicting signals regarding the possibility of reopening the waterway.
Against this backdrop, the short-term direction of oil remains highly headline-driven: any official confirmation of a ceasefire and mechanism for opening Hormuz has the potential to move prices rapidly, while the distinction between the "unconditional release" and "opening on Iran's terms" clauses will determine how far the risk premium can actually dissipate. (yds)
Source: Newsmaker.id
