Oil Prices Plunge Amid Ongoing Middle East Tensions
Oil prices have been on a rollercoaster ride this month, surging initially due to heightened tensions between the US and Iran, but then plummeting as conflicts eased. Brent crude futures posted their steepest decline in over three months, closing at $88 per barrel, while WTI crude futures fell more than 7%.
The price drop continued on Tuesday after US President Trump stated that the US and Iran were negotiating to end the Middle East conflict. However, traders remain cautious, as tanker traffic through the Strait of Hormuz has yet to return to normal.
Macquarie analysts believe the crude oil market could slip back into a supply surplus by year-end, as the Trump administration faces mounting pressure to resolve the Iran conflict with less than 100 days remaining until the midterm elections. Vikas Dwivedi, energy strategist at Macquarie, stated that 'They [the US government] hold a put option, but its value is decaying over time, and the expiration date is the midterm elections.'