Iran War Hopes Send Oil Prices Plummeting 5.3%
Oil prices plummeted by more than 5% on Tuesday after comments from Qatari and US officials raised hopes for a diplomatic resolution to the Iran war. The conflict has disrupted oil flows through the Strait of Hormuz, which carries a fifth of global oil and gas.
Brent crude futures fell $4.41, or 5.3%, to settle at $79.36 a barrel, its lowest since July 13. US West Texas Intermediate futures settled down $4.57, or 5.7%, at $75.77 a barrel, also reaching a three-week low.
US Secretary of State Marco Rubio said there was progress in talks with Iran and Oman about moving more ships through the Strait, but a final agreement had yet to be reached. Treasury Secretary Scott Bessent said a deal with Iran to reopen the strait could come as soon as Tuesday or Wednesday.
The prospect of a diplomatic solution has helped remove some of the geopolitical risk premium in oil prices after the US resumed bombing Iran last month, according to Simon-Peter Massabni, head of business development at brokerage XS.com. Disruptions to shipping through the Strait have forced Middle Eastern nations to cut oil output sharply.