New York: Oil prices fall Thursday, with the market feeling more optimism about the possibility of an agreement between the United States and Iran after diplomatic advances announced by Washington.
Around 13:20 GMT (15:20 HEC), the price of a barrel of Brent from the North Sea, for delivery in July, was down 3.64% at $97.58, after briefly falling more than 5%.
Its American equivalent, the West Texas Intermediate barrel, for delivery in June, was down 3.90% at $91.37, also showing a decrease of more than 5%.
The oil market is “ gradually shifting from a scenario of major disruption of global supply to a scenario of partial normalization of energy flows,” explains John Plassard, an analyst at Cité Gestion.
“ We had very good discussions in the last 24 hours and it is very possible that we will reach an agreement,” the American president said Wednesday during an exchange with journalists in the Oval Office.
The American president also mentioned the end of the operation in Iran, “ Epic Wrath,” in case of an agreement, while also threatening new bombings otherwise.
The main Iranian negotiator, Mohammad Bagher Ghalibaf, believed that Washington was trying to force the “ surrender” of Tehran through a “ new strategy” aimed at “ destroying the cohesion of the country“.
But the American proposal is still under consideration, according to the Iranian diplomatic spokesman.
As understood by the market, the peace framework “ would lead to a gradual reopening of the Strait of Hormuz and to the lifting of US restrictions on access to Iranian ports,” say analysts at ING.
Given the sharp drop in prices since the beginning of the week, “ the market is a little too optimistic about the chances of reaching an agreement,” says Arne Lohmann Rasmussen of Global Risk Management.
However, “ if the strait reopens, we will probably see a downward movement towards $90” for the Brent barrel, agrees the analyst.
This level remains much higher than before the start of the war in the Middle East because strategic reserves have been depleted and need to be refilled.
Furthermore, in the event of a resumption of traffic via the Strait of Hormuz, “ there would be a period of six to eight weeks between credible access conditions and a real normalization of flows,” according to Paola Rodriguez-Masiu, an analyst at Rystad Energy.
