Oil Prices Plummet 7% in One Day Amid US-Iran Conflict Pause
The price of oil has plummeted by over 7% in one day, marking its biggest drop in two months. This sudden decline comes as a result of a temporary pause in fighting between the US and Iran last Friday, which led investors to believe that a ceasefire might be re-established.
However, Mike Waltz, the U.S. ambassador to the United Nations, stated that President Donald Trump is giving diplomacy 'some space', but there's no indication that a lasting peace agreement will be reached in the near term.
The WTI crude oil price now stands at around $82.89 per barrel, while the State Street Energy Select Sector SPDR ETF (NYSEMKT:XLE) has dropped by over 1.5%. Lower oil prices mean lower profits for oil companies, but the volatility surrounding U.S.-Iranian negotiations is likely to persist.
Despite the ongoing conflict, some analysts believe that investors should maintain a certain level of exposure to domestic energy assets as a hedge against a prolonged conflict between the US and Iran. Oil is also viewed as a finite resource, which could see increased demand in the future due to rising global power consumption.