The rising hopes of a possible ceasefire agreement between the United States and Iran pushed global oil prices to their lowest levels in two weeks.
In this regard, the Brent crude oil prices dropped by 5.04 dollars to settle at 98.50 dollars per barrel, while US West Texas Intermediate (WTI) crude fell by 4.82 dollars to 91.78 dollars per barrel.
The decline in oil prices followed statements by the US President, who stated that substantial progress had been made toward a peace agreement between the two countries.
The proposed agreement is expected to restore the full operation of the Strait of Hormuz, through which nearly 25 percent of the world’s oil and gas supplies are transported.
The strategic waterway had been disrupted after Iran’s Revolutionary Guard reportedly blocked the passage following Israeli and US strikes on February 28 that resulted in the death of senior Iranian military leadership, including associates of Supreme Leader Ayatollah Ali Khamenei.
The closure caused severe supply shortages and sharply increased global shipping costs, leading to a historic rise in fuel prices worldwide.
Meanwhile, June Goh, an analyst at Sparta Commodities, said the global market continues to face a shortfall of more than 10 million barrels of crude oil per day.
She added that pressure on global reserves would likely continue until Middle Eastern production fully recovers.
However, UBS analyst Giovanni Staunovo emphasized that the oil market’s main concern remains the actual flow of crude supplies. He noted that shipments through the Strait of Hormuz are still limited despite progress in negotiations.
