NEW YORK: Oil prices fell more than $2 per barrel on Monday after reports that Iran is seeking an end to hostilities with Israel, raising the possibility of a truce and easing fears of a disruption to crude supplies from the region.
Brent crude futures fell $2.65, or 2.7%, to $71.58 a barrel by 11:05 a.m. ET (1506 GMT). US West Texas Intermediate crude futures fell $2.71, or 3.7%, to $70.27 per barrel.
Iran has asked Qatar, Saudi Arabia and Oman to press US President Donald Trump to use his influence on Israel for an immediate ceasefire in return for Tehran’s flexibility in talks about its nuclear program, two Iranian and three regional sources told Reuters.
Earlier, the Wall Street Journal had reported Iran was seeking a truce. Traders pared bets that bombing by both sides could turn into a broader, regional war that would threaten energy infrastructure, Mizuho analyst Robert Yawger said.
On Friday, oil prices surged more than 7% after Israel began bombing Iran over claims Tehran was close to securing an atomic bomb. Both sides have traded air strikes, including on energy infrastructure, but key oil export facilities have not yet been hit.
“The Israelis have not touched Kharg Island, so that is the story right now,” Yawger said, referring to the Iranian oil export hub. He cautioned that any strikes on Kharg Island would likely send oil prices soaring to $90 a barrel.
“It all boils down to how the conflict escalates around energy flows,” said Harry Tchilinguirian, group head of research at Onyx Capital Group. “So far, production capacity and export capacity have been spared and there hasn’t been any effort on the part of Iran to impair flows through the Strait of Hormuz.”
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