Oil Prices Plummet on Imminent US-Iran Deal Expectations

The price of crude oil plummeted as reports emerged that Pakistan's Chief of Army Asim Munir was carrying a proposal to Iranian leaders, including the removal of the US naval blockade and gradual lifting of sanctions under the Islamabad Memorandum of Understanding.

This news led to increased expectations for an imminent US-Iran deal, causing oil prices to sink. The losses extended later in the day when Russia's RIA Novosti reported that the US and Iran would announce a new ceasefire agreement in the coming days, including freedom of shipping via Hormuz.

The US has started returning its diplomats to Gulf states, suggesting Washington does not expect further military escalation and might try to squeeze Tehran via economic sanctions. The outlook for the oil market is more neutral to bearish at this point, even if no deal is announced in the coming days.