Oil Prices Plummet as US-Iran Conflict Shows Signs of Resolution
Oil prices have extended their losses, hitting their lowest levels in over a week as hopes for a resolution to the US-Iran conflict grow.
The Strait of Hormuz, which handles roughly one-fifth of global oil consumption, is one of the world's most important oil shipping chokepoints. The region has been a hotbed of tensions between the two nations, with both sides issuing warnings and threats in recent days.
US President Donald Trump said that Washington was having 'good talks' with Iran, but warned that US strikes would resume if negotiations failed. Meanwhile, Iran's Houthi allies in Yemen have targeted Saudi Arabia's oil infrastructure, adding to the regional tensions.
The conflict has disrupted shipping beyond the Strait of Hormuz, with traffic through the Bab el-Mandeb strait also affected. However, analysts warn that the risks to supply disruptions spreading to the Red Sea remain elevated after Saudi Arabia said it shot down drones aimed at petroleum targets.
Brent crude futures were down $2.53, or 2.86%, at $85.83 this morning, while US West Texas Intermediate crude was at $80.63 a barrel, down $1.98, or 2.40%. Both benchmarks fell to their lowest since July 17.