Oil prices plummet amid peace talks between the US and Iran.
Global oil prices have significantly declined amid news about the prospects of signing a peace agreement between the US and Iran. This was the result of trading that took place on the morning of Monday, June 15.
According to information from the London ICE Futures exchange, the price of August futures for Brent oil fell to $83.23 per barrel, which is $4.10 (4.69%) less than at the end of the previous trading day. Friday’s figures also showed a decrease of $3.05 (3.37%) to $87.33 per barrel. The price of July futures for WTI oil fell to $80.43 on the New York Mercantile Exchange (NYMEX), which is $4.45 (5.24%) less compared to previous trades.
Chief market analyst at KCM Trade, Tim Waterer, noted that the decrease in the “geopolitical risk premium” was a reaction by traders to the possibility of restoring oil flows. Investors are closely monitoring the ability of Middle Eastern countries to quickly restore oil production and export after the devastation caused by the conflict. Experts also anticipate the region being filled with new vessels.
According to Vivek Dhar from Commonwealth Bank of Australia, while market risks remain, there is a prospect that the price of Brent oil will stabilize at $80 per barrel by the end of the year, even if flows through the Strait of Hormuz reach only 60-70% of pre-war levels.
Concerns in the oil markets support the expectation of a peace agreement being signed between the US and Iran, which is tentatively scheduled for June 19 in Switzerland. Pakistani Prime Minister Shahbaz Sharif confirmed this intention. The expected terms of the agreement include the opening of the Strait of Hormuz and the removal of the US naval blockade from Iranian ports, which could significantly impact global oil markets.
