Oil Prices Plummet as China Pushes for US-Iran Peace Talks
Oil prices plummeted on Friday after sources revealed China's push to resume stalled peace talks between the United States and Iran. Brent crude futures settled at $96.78 a barrel, down $3.91 or 3.88%, while WTI futures finished at $89.31 a barrel, down $2.88 or 3.12%. The price drop comes after the US and Iran exchanged missile strikes, causing a significant decline in tanker crossings through the Strait of Hormuz.
According to John Kilduff, partner at Again Capital, 'there's nothing this market loves more than hope.' Analysts believe that any hint of settlement between the two nations will lead to a price correction. Energy markets are currently in a precarious state, with stocks remaining tight and vulnerable to changes in supply.
US President Donald Trump vowed to punish Iran for its attacks on Saudi oil tankers in the Red Sea. The Houthis declared a naval blockade on Saudi Arabia, which has been diverting oil via pipeline due to Iran's closure of the Strait of Hormuz. However, preliminary ship-tracking data from Kpler shows that daily vessel transits through the strait remain steady.
Analysts at JPMorgan predict that each additional month of disruption to oil supply would add $7 to $8 a barrel to Brent prices, potentially lifting monthly average prices to around $114 a barrel if disruptions extend to three months. Russia's forces struck Ukrainian ports overnight, targeting infrastructure and fuel reserves supporting Ukraine's armed forces.