Al Jazeera
Oil prices have experienced a significant decline, influenced by cautious optimism surrounding a potential resolution to the ongoing US-Israeli conflict with Iran.
On Sunday, Brent crude, a key benchmark in the global oil market, dropped approximately 5 percent, with Brent futures for July trading at $98.47 a barrel as of 1:05 GMT. This figure represents a nearly 9 percent decrease from one month ago, although it remains over 33 percent higher than prior to the conflict's escalation.
While the Nikkei 225, Japan's primary stock index, surged more than 3 percent in morning trading—setting an all-time high following a record close on the previous Friday—President Donald Trump's commentary on negotiations created mixed sentiments in the oil market. He stated that discussions with Tehran were moving in an "orderly and constructive manner" but cautioned that officials should "not rush into a deal." His comments were shared on his social media platform, Truth Social, where he emphasized the importance of taking time to ensure the accuracy of any agreement.
Earlier, Trump had raised expectations for a resolution by mentioning that a deal had been "largely negotiated," proposing terms that included the reopening of the critical Strait of Hormuz.
June Goh, a senior oil market analyst at Sparta in Singapore, noted, “Fundamentally, there is no change to the underlying picture where 10-11 million barrels per day of crude oil continue to be shut-in for every day the Strait of Hormuz remains shut." Goh also pointed out that the market anticipates a substantial release of approximately 100 million barrels of crude oil from vessels currently stranded once an agreement is reached.
Goh warned that market volatility is expected to persist for some time after any deal is finalized, indicating, “Sparta estimates that 3-6 months will be required to restore conditions back to normal, which includes the time needed to reactivate production and refineries.”
Since the war's inception, Iran has effectively blocked access to the Strait of Hormuz, resulting in a disruption of around 20 percent of global oil trade. Concurrently, the United States has implemented its own blockade on Iranian ports since mid-April, further complicating the shipping activities in this vital waterway.
In his Truth Social post on Sunday, Trump reaffirmed that the US blockade would remain "in full force and effect until an agreement is reached, certified, and signed."
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