Oil prices slip to their lowest since March as US, Iran reach preliminary agreement to reopen Hormuz
AI Summary
US officials express confidence that a framework agreement ending the US-Iran conflict could be signed as early as Sunday, though Iranian authorities resist this timeline and have not formally finalized their position. The proposed deal would reopen the Strait of Hormuz and include conditional sanctions relief. Separately, Western observers note that Iran has rebuilt substantial portions of its military arsenal during previous periods of reduced hostilities.
Progressive: Progressive-leaning outlets emphasize the deal's advancement toward a breakthrough and frame US-Iran as approaching an agreement to end the conflict, highlighting the diplomatic possibility rather than obstacles.
Moderate: Centrist outlets stress caution and uncertainty, focusing on Iran's military rebuilding, mixed signals from both sides on timing, or Tehran's deliberative approach to finalizing its position.
Conservative: Conservative-leaning outlets contextualize current peace negotiations with reference to Trump's previous withdrawal from the 2015 nuclear agreement.
Oil prices slipped to their lowest since March on Monday after US President Donald Trump and Iran’s deputy foreign minister said they had reached an initial deal to end the war and to resume traffic through the Strait of Hormuz.
Brent crude futures fell $4.08, or 4.7 per cent, to $83.25 a barrel by 0415 GMT and US West Texas Intermediate was at $80.53, down $4.35, or 5.1pc. Both contracts fell to their lowest levels since March 10 on Monday after tumbling more than 3pc on Friday.
The US and Iran will sign a memorandum of understanding in Switzerland on Friday, said Prime Minister Shehbaz Sharif, who first announced the agreement.
Trump said on Sunday that the Strait of Hormuz would be open “toll free” and that a US naval blockade of Iranian ports would also end.
Iran’s semi-official Mehr news agency said the draft deal called for reopening the Strait of Hormuz within 30 days under Iranian arrangements.
“The geopolitical risk premium that had been built into crude is now being unwound quite aggressively as traders price in the prospect of restored oil flows,” said Tim Waterer, chief market analyst at KCM Trade.
The world has lost millions of barrels of oil and gas supply since the war closed the Strait of Hormuz, a chokepoint for a fifth of the world’s oil and liquefied natural gas supplies, for more than three months.
Investors are also watching cautiously how quickly Middle Eastern producers can resume oil production and exports following damage from the war and whether more ships will enter the region.
“While these uncertainties suggest upside risks to our forecast for Brent oil futures to reach $80/bbl by the end of the year, it’s worth noting that oil flows through the Strait of Hormuz just need to reach 60-70pc of pre-war levels to return oil markets to pre-war oversupply expectations,” Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia, said in a note.
Iran’s deputy foreign minister, Kazem Gharibabadi, said a more expansive agreement would be negotiated during a 60-day ceasefire period.
E4 nations, which include the UK, France, Germany and Italy, said on Sunday that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear programme.
“Beyond the immediate price reaction, attention will now shift toward the pace of actual supply normalisation and compliance with the agreement,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“While the conflict may have come to an end and oil flows through the Strait of Hormuz may gradually return to normal, the damage already done cannot be reversed overnight. This includes not only any physical damage to oil infrastructure but also the economic strain endured by oil importing economies that have faced elevated energy costs for months.” ...
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