Oil dropped as the US and Iran edged towards a deal, although US President Donald Trump said that Washington’s blockade of the Strait of Hormuz would remain until an agreement was completed.
Global crude benchmark Brent fell as much as 5.7 per cent to US$97.64 a barrel, while West Texas Intermediate was below US$92. Trump said in social-media posts he wouldn’t “rush” into a deal, which “isn’t even fully negotiated yet”. Any final approval may take several days, according to senior US officials.
Still, it remains unclear how key differences, including the fate of the Islamic Republic’s nuclear programme, will be addressed. Iran’s Tasnim news agency said the draft agreement could still collapse because the US was obstructing some key clauses, including a demand that its assets be unfrozen.
Global energy markets have been upended by the crisis, which began in February when the US and Israel attacked Iran. The conflict spread rapidly across the Persian Gulf region, forcing producers to shut in millions of barrels of daily crude supplies. Hormuz – which links the region to global markets – has been subject to a double blockade by both Tehran and Washington.
Brent’s drop on Monday was its fourth decline in five sessions and puts futures on course for the lowest close in more than a month. Also in energy markets, Europe’s natural gas benchmark fell as much as 6.3 per cent.
A full reopening of Hormuz – which in peacetime typically handled around a fifth of the world’s oil and liquefied natural gas – would be a relief for energy importers across Asia, including China, Japan, and South Korea.
