Oil prices crash as US-Iran deal hopes calm Global Markets

Global oil prices continued their downward slide on Thursday as growing optimism over possible diplomatic progress between the United States and Iran eased concerns over disruptions to oil supplies through the strategically important Strait of Hormuz.

Brent crude, the international benchmark for oil prices, fell by 1.5 per cent to $99.8 per barrel after suffering an almost eight per cent decline in the previous trading session.

Similarly, West Texas Intermediate (WTI), the United States benchmark, dropped to $93.5 per barrel as markets reacted to signs that tensions in the Middle East could be softening.

The latest decline comes after a volatile week in global energy markets. Brent crude had surged to its highest level of the year on Monday amid fears that escalating hostilities involving Iran could threaten oil shipments through the Strait of Hormuz, one of the world’s busiest energy transit routes.

However, investors appeared more confident on Thursday following indications that Washington and Tehran may be moving closer toward a deal that could reduce the risk of further disruptions in the region.

Despite the recent losses, crude prices remain significantly higher than levels recorded before the outbreak of hostilities linked to the US-Israeli attacks on Iran that began on February 28.

Analysts say uncertainty surrounding the conflict means oil prices are unlikely to return to earlier levels anytime soon.

Chief European Economist at Jefferies, Mohit Kumar, said even if a diplomatic agreement is reached in the coming days, energy markets would likely continue pricing in geopolitical risks.

“Even if we get a deal over the coming days, we do not see oil prices going back to pre-war levels,” Kumar said in a market note.

According to him, the investment bank expects Brent crude to trade around $80 per barrel within the next three to six months, a level still about 25 per cent above prices seen before the conflict began.

Economists warn that persistently elevated oil prices could continue to affect global economic growth and inflation, particularly for countries heavily dependent on imported fuel.