Oil Falls, Hopes for US-Iran Dialogue Ease Market
Oil prices fell sharply on Friday (July 24th) after reports emerged that Pakistan was seeking to reopen negotiations between the United States and Iran. Brent crude closed down nearly 4% at US$96.78 per barrel.
West Texas Intermediate (WTI) crude also weakened by around 3% to end at US$89.31 per barrel. Hopes for a diplomatic path have somewhat eased market concerns about the Middle East conflict.
Pakistan's efforts to revive US-Iran talks are said to have received support from China. Beijing is seen as having an interest in promoting peace, as Iran's attacks and the closure of the Strait of Hormuz have disrupted its economic interests and energy supplies.
Despite the correction on Friday, oil prices still posted strong weekly gains. WTI strengthened by around 8% over the week, while Brent rose nearly 10% due to escalating fighting in the Middle East.
UBS believes the market may be overly optimistic about the recovery of oil supplies in the region. Incoming ship flows are still limited, so the production recovery process is expected to be slower and market conditions remain tight.
Hopes for negotiations have the potential to curb oil price increases in the short term. However, as long as the conflict and disruptions to shipping routes remain unresolved, prices are at risk of remaining high, although UBS forecasts Brent to fall towards US$85 per barrel by year-end.
Source: Newsmaker.id
