Oil Plunges to Three-Week Low
Oil prices fell to their lowest level in over three weeks on Tuesday (Aug 4) as the market grew increasingly optimistic that the US and Iran were nearing an interim agreement to reopen the Strait of Hormuz. The Brent contract for October delivery closed down 5.3% at US$79.36 per barrel, while the WTI contract for September delivery plunged 5.7% to US$75.77 per barrel.
Selling pressure intensified after US Treasury Secretary Scott Bessent stated that a deal to reopen the Strait of Hormuz could be reached soon. Qatar also reported that a de-escalation draft had been circulated among the relevant parties, although no final agreement has yet been reached.
Iran is also reportedly considering allowing European nations to clear mines from the Strait of Hormuz. Such a move could provide additional security assurances for shipping and insurance companies, potentially allowing the flow of commercial vessels to gradually return to normal.
However, supply risks have not entirely vanished. Oil flows through Hormuz remain well below pre-war levels, while attacks on vessels and conflicting demands between Washington and Tehran could derail the agreement at any moment.
The decline in oil prices was further exacerbated by technical selling as market participants rapidly trimmed long positions. Conversely, Middle East export disruptions, Houthi threats in the Red Sea, and Ukrainian attacks on Russian energy infrastructure could still limit further downside.
Newsmaker Analysis: Short-term sentiment for oil remains bearish as long as diplomatic progress continues. With Brent holding below US$80, it could test the US$78–US$76 range, while WTI might head toward US$75–US$73. However, a breakdown in negotiations or fresh attacks could push Brent back to US$82–US$85 and WTI to US$78–US$81. The market is likely to remain highly sensitive to any news emerging from the US, Iran, Qatar, and Oman. (arl)
Source: Newsmaker.id
