But Iran warns the war could resume and “transcend every border and domain”: File Image/Pixabay
Two key benchmarks on Wednesday dropped by 5 percent after U.S. president Donald Trump told media that Washington is in the final stages of peace negotiations with Iran.
This followed the brash billionaire calling off renewed military strikes against the Islamic republic earlier this week.
Brent plummeted 5.6 percent to close at $105.02 per barrel, and West Texas Intermediate dropped by the same percentage to close at $98.26 per barrel.
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You’ve got to take all these pronouncements with a grain of salt
John Kilduff, founding partner, Again Capital
According to Wood Mackenzie, oil prices would plummet severely if the U.S. and Iran reached a peace deal that opened the Strait of Hormuz by June; however, it was difficult for many pundits to imagine such a deal taking place, considering Trump’s remarks on Wednesday were accompanied by the commander of Iran’s Islamic Revolutionary Guard Corps vowing that the war will “erupt into flames and transcend every border and domain” if any new strike should be initiated by the U.S.
U.S. secretary of war Pete Hegseth responded that his country was “locked and loaded” in the event Iran agreed to anything less than halting its nuclear ambitions.
John Kilduff, founding partner at Again Capital, said, “You’ve got to take all these pronouncements with a grain of salt these days, but the market was also quick to reward it and price in the hope of a resolution.”
Citibank told clients that “It appears increasingly likely, in our view, that the Iranian regime will disrupt Strait of Hormuz flows for some time” and added that it expects Brent to trade up to $120 per barrel in the near term.
For his part, Sultan Al Jaber, CEO of United Arab Emirates’ ADNOC, estimated that if the Strait were to open without incident, it would take at least four months to recover about 80 percent of -pre-war flows.
Meanwhile, the Energy Information Administration reported that elevated demand caused U.S. stockpiles to fall by 7.9 million barrels to 445 million barrels in the week ended May 15, compared with expectations for a 2.9 million barrel draw.
Ship & Bunker News Team
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