Strait of Hormuz Reopening Hopes Push Oil Lower

Oil prices fell sharply and Asian stock markets strengthened after reports of a possible agreement between the United States and Iran that could help ease tensions involving Washington, Israel and Tehran.

US Secretary of State Marco Rubio said during a visit to India that negotiators had a “pretty solid proposal” on the table and that an agreement could be reached as early as Monday.

Brent crude fell 5.5% in response, dropping below $98 a barrel, while US crude declined by nearly 6%.

US President Donald Trump had earlier suggested that part of the agreement could involve reopening the Strait of Hormuz, a key shipping route through which roughly one-fifth of global oil and liquefied natural gas supplies normally pass.

Iran, meanwhile, acknowledged that positions between Washington and Tehran had moved closer over the past week, although officials warned that significant disagreements remained unresolved.

Trump said the proposed agreement was designed to prevent Iran from obtaining a nuclear weapon, while also urging caution over the pace of negotiations.

“Both sides have to take their time and get it right. There can be no mistakes”, he wrote on social media.

Analysts cautioned that even if a deal is reached, oil markets are likely to remain tight for several years. Shipping through the Strait of Hormuz is also expected to recover only gradually.

(bbc, bak)