Oil Falls After Trump Announces Final Stage of Iran Negotiations
US crude oil prices fell below $100 per barrel on Wednesday (May 20) after President Donald Trump said that negotiations with Iran were in the "final stages." West Texas Intermediate (WTI) closed at $98.26 per barrel, down more than 5%, while Brent fell more than 5% to $105.02 per barrel. Trump's statement boosted market sentiment and eased temporary concerns about global oil supply disruptions.
Trump postponed military strikes on Iran earlier this week to allow time for diplomacy, at the request of Gulf Arab allies. He told reporters that his administration was in the final stages of negotiations, raising hopes of reopening the Strait of Hormuz, a vital trade route for global oil and gas supplies. However, tensions remain as Iran and the US are at a standoff, with both sides blockading each other's ports.
Citibank warned that the market is still underestimating the risk of long-term disruptions in the Strait of Hormuz. According to Citibank analysts, Brent could reach $120 per barrel in the short term if disruptions continue. In an extreme scenario, where Hormuz remains closed until the end of the year, oil prices could even reach $200 per barrel, according to Wood Mackenzie analysis.
Conversely, if the US and Iran reach a quick agreement and reopen Hormuz in June, oil prices are predicted to fall sharply. Wood Mackenzie estimates that spot Brent could fall to around $80 per barrel by the end of 2026 in this scenario. This demonstrates how sensitive the oil market is to diplomatic developments in the Middle East.
Investors and market participants are closely monitoring any indication of progress in negotiations, as diplomatic decisions will determine the direction of global oil prices in the coming months. Price spikes or falls not only impact energy but also potentially impact global inflation and financial market stability.
Source: Newsmaker.id
