Oil Prices Slide on Phased Deal to Reopen Strait of Hormuz
Oil prices dipped on Friday as news emerged that US and Iranian negotiators are discussing a phased deal to reopen the Strait of Hormuz, easing some supply concerns. Brent crude was trading at $106.03 a barrel, down 0.53%, while West Texas Intermediate (WTI) stood at $93.82, down 0.84%. The recent surge in oil prices had seen Brent touch an intraday high of $108.23 on Thursday before paring gains due to reports of the US-Iran talks.
The Strait of Hormuz has been a major point of contention between Iran and Saudi Arabia, with attacks on shipping lanes sparking concerns about global supply. Iranian Foreign Minister Abbas Araghchi revealed that his country's delegation at the United Nations General Assembly had floated a proposal to reopen the strait within seven days, contingent on the US easing military pressure and lifting its blockade on Iranian ports.
However, analysts at BMO Capital Markets cautioned that Saudi crude supply concerns are 're-emerging', as the restart of the East-West pipeline has yet to translate into a resumption of Red Sea exports. JPMorgan told clients it had lost visibility on oil's direction and no longer has a clear baseline scenario for the market.