Trump Opens Door to Peace; Oil Prices Plunge
Global oil prices slumped sharply on Monday (Aug 3), hitting a three-week low. Brent crude for October delivery fell 4.9% to US$83.66 per barrel, while WTI dropped 5.8% to US$79.75 per barrel.
Downward pressure mounted after US President Donald Trump called off plans for a major strike against Iran. With Washington and Tehran scheduled to resume talks on Monday, markets are hopeful that the conflict will de-escalate and the risk of oil supply disruptions will diminish.
Trump stated that the proposed deal includes the full opening of the Strait of Hormuz and the resolution of the threat posed by Iran's nuclear program. However, he emphasized that the United States remains ready to launch an attack should diplomatic efforts fail again.
Oil prices had previously surged more than 20% throughout July as the conflict spread to key energy corridors. Drone attacks on Saudi oil facilities and gas vessels in Egypt, along with incidents involving shipping in the Strait of Hormuz and the Red Sea, had briefly pushed Brent prices above US$90 per barrel.
Newsmaker Analysis: Optimism surrounding the talks has caused the geopolitical risk premium on oil to shrink. As long as US-Iran discussions remain positive, WTI prices could stay under pressure below US$80. However, a breakdown in negotiations or fresh attacks could trigger a sharp rebound, given that the security of Middle East supplies has not yet fully recovered.
Source: Newsmaker.id
