Oil Prices Under Pressure After US Claims Peace Deal with Iran
Oil prices fell sharply on Monday (May 25) after a United States official stated that Washington and Tehran had reached an agreement "in principle" on a peace agreement that would reopen the Strait of Hormuz. This statement triggered a release of geopolitical risk premiums, although a final agreement could still take several days.
The Strait of Hormuz is a vital shipping lane between Iran and Oman for oil and gas trade. This route typically carries about a fifth of the world's oil supply, so any potential disruption tends to be immediately reflected in a risk premium in oil prices. Within this framework, the prospect of reopening the route eased concerns about supply continuity.
A US official also said Iran would commit to disposing of its stockpile of highly enriched uranium. However, to date, Iranian leaders and state media have not publicly commented on the details or direction of the agreement, maintaining an element of uncertainty in the market.
Brent, the global benchmark, fell about 6% and briefly touched a one-month low of around US$94.50 per barrel for August delivery. WTI, the US benchmark, also fell around 6% to around US$91 per barrel for July delivery.
This movement underscores oil's sensitivity to geopolitical channels: as the risk of supply disruptions subsides, risk premiums erode and prices correct, even before a final decision is made. Market focus in the coming days will likely be on whether the deal is actually ratified, Iran's official response, and whether there are any tangible changes to security conditions and shipping access in the Strait of Hormuz. (Arl)*
Source: Newsmaker.id
