Oil prices fell as U.S. President Donald Trump called off planned military strikes on Iran, citing progress in discussions. Brent futures dropped $1.21 or 1.3% to $89.17 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $1.23 or 1.4% to $86.48. On a weekly basis, Brent and WTI were down 4.2% and 4.4% respectively.
The market reacted swiftly to Trump's decision, which came after Iran's semi-official Fars news agency reported that Tehran had not approved the text of any agreement. This development follows Iran's announcement of the closure of the Strait of Hormuz, a critical chokepoint for global oil shipments.
Despite the downward correction in oil prices, the market remains cautious. "As long as the price can hold above support in the low $80s, the risks remain firmly skewed to the upside," said IG market analyst Tony Sycamore.
“As long as the price can hold above support in the low $80s, the risks remain firmly skewed to the upside.”
Tony Sycamore, IG market analyst
The U.S. military has stated that commercial ships continue to transit the Strait of Hormuz, despite Iran's months-long blockade that has kept oil prices elevated. The situation remains fluid, with potential implications for global energy markets.
Historically, tensions in the Middle East, particularly involving Iran, have had significant impacts on global oil prices. The Strait of Hormuz is a strategic waterway through which a fifth of the world's oil and liquefied natural gas shipments pass.
Background
Historically, tensions in the Middle East, particularly involving Iran, have had significant impacts on global oil prices. The Strait of Hormuz is a strategic waterway through which a fifth of the world's oil and liquefied natural gas shipments pass.
Looking ahead, market participants will closely monitor developments in U.S.-Iran relations and any changes in the status of the Strait of Hormuz, as these factors could influence future oil price movements.
