US-Iran Diplomacy Hopes Send Oil Prices Plummeting
Oil prices dropped by over 4 percent on Monday despite ongoing hostilities between Iran and the Houthi rebels in Yemen. This decline was largely attributed to diplomatic hopes among investors that a return to progress between the US and Iran would prevail this week.
The optimism stemmed from the impending visit of Iranian President Masoud Pezeshkian to the United Nations, as well as US President Donald Trump's statement that he would be open to meeting with him. Bob Yawger, director of energy futures at Mizuho, noted that just a couple of days ago, such an idea seemed far-fetched, but it is now seen as a positive move.
As a result, Brent crude settled down $3.53, or 3.4 percent, to $100.34 per barrel, while West Texas Intermediate fell by $4.52, or 4.5 percent, to $95.78 per barrel. The Saudi Aramco's loading of 14 million barrels of crude on seven supertankers inside the Mideast Gulf also had an impact on trading.
However, despite these developments, it remains unclear whether the optimism will last long enough for oil prices to fall further. The Houthi rebels claimed to have attacked Riyadh and a Saudi Aramco facility in Yanbu with cruise and ballistic missiles plus drones, while Iran's leaders warned that they would deploy new weapons and expand the geography of the conflict if the US launches another offensive.