Oil prices dropped below $100 a barrel on Tuesday after a Kyodo News report said Iran had offered to reopen the Strait of Hormuz within seven days if the United States eased military pressure. Iran's Fars News agency later denied the reports, and crude clawed back some of its losses.
Brent crude dipped below the $100-a-barrel level on Tuesday, extending a slide triggered by a Kyodo News report that Iran had offered to reopen the Strait of Hormuz within seven days if Washington takes initial steps toward easing military pressure. The benchmark went on to hit a new low of $97.50 a barrel, though that remains above Brent's pre-Iran war levels of around $72 a barrel.
Iran official points to a possible deal
A senior Iranian government official told Kyodo: "There is a possibility of moving toward an agreement." The official added that Washington must demonstrate seriousness and commitment if diplomacy is to advance. Kyodo also reported that Iran's proposal had already been conveyed to Washington through mediators, with calls for renewed talks toward a permanent end to hostilities. The same official ruled out a meeting between Iranian President Masoud Pezeshkian and US President Donald Trump on the fringes of the UN gathering, while saying progress toward an agreement remains possible.
Crude also touched a two-week low of $98.33 a barrel, its lowest since September 8. The move rippled into equities: BP shares dropped 2.5%, the biggest faller on the FTSE 100, followed by defense contractor BAE Systems, down 2%, as hopes of a diplomatic resolution to the Iran war picked up again.
Fars News denial pares back the drop
Iranian sources cited by Fars News dismissed the reopening reports as inaccurate, saying they did not reflect Tehran's position. Following the Fars News report, oil prices erased some of the earlier losses, though the rebound has not been strong. The conflicting reports come as markets remain highly sensitive to any sign of progress toward US-Iran de-escalation ahead of the UN General Assembly.
This might be a sign that the market is still assigning a higher chance of de-escalation, given the constraints facing Trump: munitions shortfalls, elevated yields, rate hikes, sinking political approval and Gulf governments pushing for an end to the conflict.
Sources: The Guardian, InvestingLive
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