Oil prices slump after Pakistani source says US and Iran are close to framework peace deal
- Brent crude futures fall $10.07, or 9.2%, to $99.80 a barrel by 1042 GMT
Oil prices tumbled to two-week lows after reports emerged that the United States and Iran are close to reaching an initial peace agreement, potentially easing crude supply concerns from the Strait of Hormuz.
- US and Iran nearing an initial peace deal
- Significant declines in Brent and WTI crude oil prices
- Impact of the Strait of Hormuz closure on global oil supplies
LONDON: Oil prices extended declines on Wednesday, slumping to two-week lows after a Pakistani source said the United States and Iran were nearing an initial peace deal.
Brent crude futures fell $10.07, or 9.2%, to $99.80 a barrel by 1042 GMT, dropping below $100 for the first time since April 22. U.S. West Texas Intermediate lost $10.79, or 10.6%, to $91.48.
Both benchmarks were on track for their biggest daily declines in absolute terms in a month and hit their lowest in two weeks, having shed about 4% in the previous session.
A source from mediator Pakistan said the United States and Iran were closing in on an agreement on a one-page memorandum of understanding.
Also read: Trump pauses Hormuz operation: PM Shehbaz says ‘grateful’ for courageous leadership
U.S. media outlet Axios reported that the U.S. expects Iranian responses on several key points in the next 48 hours, citing sources saying this was the closest the parties had come to an agreement since the war began.
Iran had said earlier that it would only accept a fair and comprehensive agreement.
The U.S. military said on Monday that it destroyed several Iranian small boats as part of efforts to help stranded ships to exit the Strait of Hormuz.
Crude oil supply losses from halted marine traffic through the strait since the war began in February have driven up prices, with Brent trading last week at its highest since March 2022.
The Strait of Hormuz closure has resulted in a drawdown in global oil and fuel inventories as refineries try to offset production shortfalls.
U.S. crude oil inventories fell for a third week, while gasoline and distillate stocks also declined, market sources said on Tuesday, citing American Petroleum Institute figures.
Also read: US and Iran closing in on one-page memo to end war, reports
Crude stocks fell by 8.1 million barrels in the week ended May 1, the sources said. Gasoline inventories were down by 6.1 million barrels from a week earlier and distillate inventories fell by 4.6 million barrels, the sources said.
Official numbers from the EIA, the statistical arm of the U.S. Department of Energy, are due at 1430 GMT.
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