Oil Falls Sharply After Trump Cancels Strikes
World oil prices fell nearly 3% in trading on Friday (June 12th), hitting their lowest level in almost two months. The decline occurred after US President Donald Trump canceled plans for new strikes against Iran, easing market concerns about an escalating conflict in the Gulf region.
Brent futures fell 2.5% to US$88.11 per barrel, while West Texas Intermediate (WTI) fell 2.8% to US$85.24 per barrel. Both oil benchmarks were at their lowest levels since April 17th, reflecting a shift in market sentiment from fears of war to hopes for diplomacy.
Positive sentiment emerged after reports that a memorandum of understanding between the United States and Iran to end the Gulf war could be signed as early as Sunday. Geneva was cited as the most likely location for the signing, although this news has not been fully confirmed by all parties.
Meanwhile, Iranian media outlet Fars denied that an agreement could be signed in Geneva on Sunday. Meanwhile, the Mehr news agency reported that final negotiations on the memorandum would focus on nuclear and economic issues, but would not include discussions on Iran's missile program.
The IRNA news agency also reported that nuclear talks would take place within 60 days of the memorandum being signed. This suggests that while there is a chance of a de-escalation in the conflict, the diplomatic process remains lengthy and has not completely eliminated geopolitical risks in the energy market.
In opinion, the current decline in oil prices is driven largely by changing headlines and growing market confidence that a peace agreement can ultimately be reached. However, supply risks have not completely disappeared as global and regional oil stocks remain low. Even if an agreement is reached, the market will still need time to ensure normal oil flows and the Strait of Hormuz returns to uninterrupted operation.
Source: Newsmaker.id
