International
Oil: Prices fall below the $100 threshold
A wave of relief swept through the markets on Monday, driven by hopes of a potential agreement between the United States and Iran to bring a lasting end to the war in the Middle East.
After “weeks spent navigating a geopolitical hurricane,” markets are beginning a shortened week due to a public holiday with “investors finally watching the clouds of war start to dissipate over the Strait of Hormuz”—a strategic passage through which 20% of the global supply of oil and liquefied natural gas (LNG) transited before the conflict, notes Stephen Innes, manager at SPI AM, quoted by AFP.
The United States said on Monday it was still close to reaching a “solid” agreement with Iran, after Donald Trump tempered expectations the previous day of an imminent deal to bring a lasting end to the conflict.
According to US media, the agreement being prepared between Tehran and Washington would allow ships to once again pass through the Strait of Hormuz.
In response, Brent crude from the North Sea, the global oil benchmark, was down sharply (-5.00%) at $98.36 per barrel around 07:20 GMT, falling below the $100 mark for the first time in two weeks. Its US equivalent, WTI, dropped by 5.40% to $91.38 per barrel.
Thus, “the reopening of the Strait of Hormuz is becoming increasingly tangible,” summarises Mr Innes. “Markets are beginning to price in the idea that one of the world’s most critical energy arteries could ultimately avoid a prolonged disruption.”
