Oil Prices Plunge 6%, US-Iran Close to Agreement
World oil prices again experienced sharp pressure on Wednesday (May 6) after reports emerged that the United States and Iran were close to reaching an agreement to end the conflict. This sentiment triggered a major sell-off in the energy market, sending oil prices down more than 6%.
Brent crude futures for July delivery fell 6.2% to US$103.04 per barrel, while West Texas Intermediate (WTI) weakened 6.6% to US$95.55 per barrel. This decline extended the decline after both contracts closed down nearly 4% in the previous trading session.
Pressure on oil prices intensified after an Axios report indicated that Washington and Tehran were drafting a one-page wartime agreement. US President Donald Trump also said his administration would temporarily suspend "Project Freedom," an effort to restore commercial shipping lanes through the Strait of Hormuz. This move raised market hopes for a diplomatic breakthrough between the US and Iran.
However, the oil market remains overshadowed by the risk of high volatility. ING analysts assess the normalization of oil flows through the Strait of Hormuz as a crucial factor in stabilizing the global energy market. The approximately 13 million barrels per day of supply, which was previously disrupted, is currently largely supported by declining oil reserves, leaving the market vulnerable to further volatility.
Meanwhile, the decline in oil prices was temporarily halted by US crude oil inventory data. Data from the American Petroleum Institute (API) shows that US crude oil stocks fell sharply by 8.1 million barrels in the past week. Gasoline and distillate inventories also fell by 6.1 million barrels and 4.6 million barrels, respectively, indicating that US energy supplies are beginning to tighten amid global geopolitical uncertainty.
Source: Newsmaker.id
