War Premium Unwinds as Crude Prices Fall Amid Diplomatic Efforts
The recent decline in crude oil prices is not due to an increase in supply, but rather the unwinding of a 'war premium' caused by tensions in the Middle East.
The price of Brent crude fell by 1.5% to $87.05 per barrel on Tuesday, while WTI crude dropped by 1.2% to $81.59 per barrel.
This decline is the third consecutive session of losses for both oil prices, and follows a 10% drop over the past three sessions.
The catalyst behind this decline is diplomatic rather than fundamental, as the US has quietly halted its campaign of strikes against Iran after nearly two weeks of hostilities.
Iran's foreign minister held separate calls with his Saudi and Omani counterparts to discuss the removal of insecurity imposed on the Strait of Hormuz, which is a significant development in the region.