Oil prices plummet as Trump claims he is close to US-Iran deal | Oil
Global oil prices fell on Friday to the lowest levels not seen since the first week of the Iran crisis after Donald Trump said he was close to reaching a peace deal with Tehran.
The price of Brent crude began falling from around $93 a barrel in overnight trading after the US president canceled new military strikes against Iran planned for this evening.
It briefly traded below $85 a barrel on Friday morning and later traded at $87.50, down 3% on the day, on hopes that a deal between the United States and Iran could mean the reopening of the Strait of Hormuz by the end of the week.
However, after Trump rejected reports of the impending deal by Iran, saying that the announced terms “have nothing to do with reality”, the price started to climb again, reaching above $89.
Trump canceled the new offensive plan on Thursday, saying talks with Iran were making progress and a peace deal could lead to the reopening of trade through the Strait of Hormuz this weekend.
Tehran said it had not made a final decision but said most of the deal had been completed.
“Headlines are once again driving the market as confidence grows that an agreement will eventually be reached and the strait will be reopened,” said PVM Oil Associates analyst Tamas Varga.
The collapse in the oil market has pushed prices to the lowest level since early March, when Iran blocked oil and gas shipments from the Gulf following US-Israeli attacks on Tehran.
The blockage on the vital trade route caused oil prices to soar to $113 a barrel before members of the International Energy Agency coordinated an emergency release of 400 million barrels of crude oil to calm the market. Before the war began, Brent was trading at around $70 a barrel.
Oil prices have been falling in recent weeks due to a number of factors that have helped rebalance the market, including import cuts from China and the emergence of secret crude oil exports from the Gulf via “dark passes”.
Chris Beauchamp, IG’s chief market analyst, said: “Of course, the usual pesky caveats about details and signatures remain, but if the two sides can reach a deal that will actually reopen Hormuz, it could provide an excellent boost to a stock market rally that is starting to look a bit tired.”
European markets followed Asia higher on Friday, while the pan-European Stoxx 600 fell 1.5%.
Goldman Sachs, one of the most influential players in the global oil market, said on Friday that it expects oil prices to average $90 per barrel in the last quarter of the year, as oil flows begin to gradually return to normal as of August and countries refill their depleted stocks.
However, the US investment bank reduced its 2027 oil price forecast to between $5 and $80 per barrel due to high supply and low demand forecast from the Americas and the United Arab Emirates.
