Oil prices extended losses on Wednesday as easing fears of Gulf military conflict and progress toward an Iran-Oman deal on the Strait of Hormuz weighed on the market. Brent crude dropped 2.93% to $85.99 a barrel while U.S. WTI fell 2.78% to $80.07 a barrel.
Oil prices fell further on Wednesday as traders weighed easing concerns about military conflict in the Gulf against progress toward an Iran-Oman agreement securing safe transit through the Strait of Hormuz.
Brent and WTI both drop sharply
International benchmark Brent crude futures for October delivery declined 2.93% to $85.99 a barrel as of 5:39 a.m. ET. U.S. West Texas Intermediate futures for October dropped 2.78% to $80.07 per barrel.
According to AJ Bell: "U.S. sanctions on Iran were less severe than anticipated", said Dan Coatsworth, head of markets at the firm, adding that lower oil prices helped markets regain some poise as government bond yields eased back from recent highs.
Shift away from military action reduces perceived risk
The shift away from military action reduced the perceived risk to Gulf supply, even though the U.S. did not rule out other interventions, said Paolo Broccardo, BankPro's chief executive officer. Pakistan also reported meaningful progress in talks aimed at de-escalation and restoring navigation through the Strait of Hormuz, Broccardo noted.
Iran and Oman discuss a joint shipping route
Iran and Oman were discussing a joint temporary shipping route in the Strait of Hormuz and a mine-clearing mission, a precursor to a permanent arrangement to administer the waterway. Oman's foreign minister said in a social media post that future management of the Strait and a permanent solution would follow in due course. Discussions with regional partners would be conducted in support of peace, cooperation, stability and freedom of navigation, the minister added.
Source: CNBC
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