Oil prices fell for a fourth straight session as markets bet that Middle East diplomacy will ease supply constraints. Brent and WTI crude are both down more than 6% over the past week, even as the U.S. tightened sanctions on Iran and reports pointed to progress on a ceasefire and a Strait of Hormuz shipping deal.
Brent crude fell 0.5% to $87.37 a barrel, and WTI dropped 0.5% to $81.79 a barrel on Thursday. Both benchmarks were down over 6% for the week, as optimism over a potential deal overshadowed ongoing U.S.-Iran tensions.
Traders are watching for any easing of supply risk out of the Middle East, a factor that has driven the past week's moves.
Diplomacy hopes offset fresh sanctions
The U.S. imposed stricter economic sanctions on Iran earlier this week and warned other countries against trading with Tehran. Yet Russian state media reported that the U.S. and Iran had reached a new ceasefire deal, expected to be announced in the coming days.
Separately, media reports said Iran and Oman are approaching an agreement on commercial shipping routes through the Strait of Hormuz, though Tehran warned the deal may not mean an immediate reopening of the crossing. Pakistan, a major regional mediator, also flagged progress in its peace talks with Iran.
Hormuz flows still lag pre-war levels
Despite the diplomatic signals, shipping data showed flows through the Strait of Hormuz remained at a fraction of pre-war levels. The channel supplied roughly 20% of the world's crude before the conflict and has become a flashpoint in the U.S.-Iran war.
Russia-Ukraine tensions get sidelined
Elsewhere, reports suggested Russia was planning to escalate attacks on Ukraine after concluding that negotiations had largely hit an impasse, considering increased ballistic missile strikes on Kyiv and other infrastructure targets. Still, that conflict has had little pull on oil prices lately.
According to ING: "completely sidelined by markets for a while", analysts said of the Russia-Ukraine conflict, adding that commodity markets continue to look only at the Middle East situation.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
