Oil Prices Plummet on Hopes for Strait of Hormuz Reopening
Oil prices fell sharply on Thursday due to hopes that talks between Iran and Qatar might ease supply disruptions from the war in the Middle East. Brent crude futures dropped by US$1.07, or 1.2 per cent, to US$86.77 a barrel at 0645 GMT, while West Texas Intermediate crude futures fell US$1.13, or 1.4 per cent, to US$81.10.
The Strait of Hormuz has been a major concern for oil supply, with ship-tracking data showing that oil flows have dropped to about one-quarter of their pre-war level since Iran shut the waterway in response to the US-Israeli war on February 28.
Qatar's Prime Minister Mohammed bin Abdulrahman bin Jassim Al Thani will head to Iran on Thursday to relaunch diplomatic talks to end the conflict, which is nearly six months old. However, concerns over shortages in the oil market persist, with ANZ senior commodity strategist Daniel Hynes cautioning that 'at the heart of the dispute remains Iran's nuclear programme and that is unlikely to be resolved quickly.'