Hormuz Hopes Lift Oil Prices, But Analysts Remain Cautious
Oil prices plummeted over 4% on Monday to two-week lows as optimism grew that the US and Iran were making progress towards a peace deal, despite remaining at odds over key issues.
The price of Brent crude futures fell $4.44, or 4.3%, to $99.10 a barrel, while US West Texas Intermediate futures dropped $4.36, or 4.5%, to $92.24 a barrel.
US President Donald Trump stated on Saturday that Washington and Iran had 'largely negotiated' an understanding for a peace deal that would reopen the Strait of Hormuz, which carries a fifth of global oil shipments. However, several difficult issues remain unresolved, with Trump cautioning his representatives not to rush into any agreement.
'We've been at this stage before, only for talks to break down,' said Warren Patterson, head of commodities strategy at ING. 'Therefore, the market will likely be more cautious about overreacting.'
Analysts expect a return to normal oil flows through the strait to take months, while damaged oil and gas facilities are repaired.