Oil Prices Plummet on Fed Policy Hints, Strait of Hormuz Deal Rumors
Oil prices settled lower on Friday, marking their third decline this week. Brent crude futures closed at $89.31 a barrel, down 39 cents or 0.43%, while West Texas Intermediate (WTI) crude futures finished at $83.40 a barrel, down 13 cents or 0.16%. The decline follows comments from new Fed Chairman Kevin Warsh indicating a possible rate hike later this year to curb inflation.
Phil Flynn, senior analyst at the Price Futures Group, attributed the price drop to the global products market's strong demand for further Ukraine strikes on Russian refineries. However, rumors of a deal to reopen the Strait of Hormuz over the weekend have added uncertainty to oil markets.
The U.S.-Israeli war with Iran has entered its sixth month, and traders are watching as flows of oil through the strait make a choppy recovery. According to Rystad analyst Janiv Shah, the market has been surprised by the additional flow from the Iran-Oman shipping corridor and the U.S. mine clearance claims.
Mediators are stepping up efforts to get the Strait of Hormuz reopened, with Tehran agreeing to draw up a list of conditions to restore normal traffic after a Qatari emissary pressed the Iranians to respect freedom of navigation.