Oil prices fall amid hopes for US-Iran peace deal

International

GLOBAL oil prices dropped sharply while Asian stock markets posted gains amid growing optimism over a possible peace agreement between the United States and Iran that could help ease tensions in the Middle East.

On Monday in Asia, global oil benchmark Brent was down by 5.5% at $97.90 (£72.64), while US-traded crude was 5.9% lower at $90.93.

According to a report by BBC News, US President Donald Trump said over the weekend that a deal with Tehran had been “largely negotiated” and that more details could be announced soon. However, Trump later urged negotiators to proceed carefully and avoid rushing the agreement.

The possibility of reopening the Strait of Hormuz also boosted investor confidence. The key shipping route, which carries about one-fifth of the world’s oil and liquefied natural gas supply, has remained largely closed since conflict erupted between the US, Israel, and Iran on February 28.

Asian markets reacted positively to the developments, with Japan’s Nikkei 225 index rising 2.9 percent and surpassing the 65,000 level for the first time. Japan and neighboring South Korea have been among the countries most affected by the conflict due to their heavy dependence on Gulf energy supplies.

Trump also revealed on social media that he had spoken with leaders from Saudi Arabia, the United Arab Emirates, Qatar, and other nations regarding what he described as a “Memorandum of Understanding pertaining to PEACE.”

According to Trump, the agreement is still subject to final negotiations involving the United States, Iran, and several other countries. He also confirmed holding discussions with Israeli Prime Minister Benjamin Netanyahu, saying their conversation “went very well.”

Despite the positive developments, Trump emphasized that any final agreement must ensure Iran does not obtain nuclear weapons. On Sunday, he said both sides should “take their time and get it right.”

Iranian foreign ministry spokesperson Esmaeil Baqaei earlier stated that discussions between Washington and Tehran had shown signs of convergence in recent weeks, although he cautioned that major disagreements remain unresolved.

Oil markets have experienced significant volatility since March after Iran threatened ships attempting to pass through the Strait of Hormuz in response to US and Israeli attacks.

Although prices declined sharply on Monday, crude oil remains considerably more expensive compared to levels before the conflict began. Prior to the tensions, Brent crude traded at around $70 per barrel.

The conflict also saw Iran launch attacks on Israel and Gulf states allied with the United States, including Saudi Arabia, Bahrain, and the United Arab Emirates.

A ceasefire was reached in early April, leading to renewed negotiations between Washington and Tehran over a possible long-term peace agreement.

Saul Kavonic, head of energy research at MST Financial, said recent developments offered “some light at the end of the tunnel” that could provide short-term relief for oil prices.

However, he warned that global oil markets could remain tight through 2027 due to the time needed to restore shipping operations, repair damaged facilities, and rebuild depleted oil reserves.(Angel Sheane Dumas, CNU-Main Campus BA Comm-BJ Intern)