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Oil drops as Iran war diplomacy eases Hormuz shipping fears
Brent settled below $89 a barrel and WTI just above $82 after Iran diplomacy and an interim framework for Strait of Hormuz shipping revived optimism, even as the US unveiled new Iran-related economic pressure.
Oil prices extended their decline on fresh diplomatic efforts around the Iran war, easing concerns about a renewed risk to shipping through the Strait of Hormuz. Brent settled nearly 4% lower to trade below $89 a barrel, its lowest finish in over a week, while West Texas Intermediate ended just over $82, according to LiveMint Markets.
Traders also appeared to look past a US plan to ramp up economic pressure on Tehran by the way it was framed for international partners. LiveMint Markets reported the Trump administration stopped short of imposing secondary sanctions on countries dealing with Iran, including China, and instead outlined a timeline for nations to shut down links with Tehran or face unilateral punishment.
The US Treasury added new restrictions affecting about 60 entities, including Iran-linked oil revenue networks and shadow fleet vessels moving petroleum products, but the measures were viewed as more of an early policy warning than an immediate disruption to physical supply. Karobaar Capital LP chief investment officer Haris Khurshid said the lack of secondary sanctions that would change who can buy, ship, or finance Iranian crude reduced the need for traders to add further geopolitical risk premium.
Prices also dipped earlier after a New York Times report said the US would be returning diplomats to Middle East embassies, which suggested Washington was not anticipating an escalation in military action. LiveMint Markets noted crude is still up around 45% for the year, with the sixth month of the war continuing to disrupt Middle East oil and refined fuel shipping, particularly in fuel markets.
Latest closeWTI crude $82.40 ▲1.4%|Brent $88.59 ▲1.8%