Crude prices tumbled more than 5 per cent Tuesday – and are down more than 10 per cent this week – after US Treasury Secretary Scott Bessent said a deal could be reached imminently with Tehran on re-opening the Strait of Hormuz to shipping traffic.
He told CNBC television that “I think there is a chance we may have a deal today or tomorrow to open the strait” – a key sticking point in ceasefire talks.
“I’d expect the energy prices to settle back down, which, as I said, will be good for the entire world.”
President Donald Trump later warned Iran would be “hit very hard” unless the waterway was reopened “very soon”.
His comments to Fox News came as Axios reported that the US, Iran and Oman were nearing an interim deal to reopen the strait, which Washington was hoping to announce Wednesday.
The Brent and West Texas Intermediate crude contracts fell again Wednesday.
“The past few sessions have been pivotal for financial markets, largely thanks to signs of diplomatic progress around the Strait of Hormuz,” wrote Julian Pineda at City Index.
He said officials’ comments regarding progress in talks “has had a direct impact on market confidence. With geopolitical uncertainty easing, WTI crude has slipped below the US$80 mark, helping to dial back fears of global inflation.
“This, in turn, eases concerns about aggressive central bank rate hikes, clearing the way for risk appetite to recover.”
And IG Markets’ Tony Sycamore said “the balance of risks appears to be becoming more skewed back to the upside”.
The drop in oil prices helped ease concerns about inflation and saw traders lower their expectations for the Federal Reserve to hike interest rates, according to Bloomberg.
Investors are keeping tabs on the release this week of crucial US jobs data that should provide them with a fresh idea about the state of the economy, and guide the Fed as it considers its next move.
Discover more from PressNewsAgency
Subscribe to get the latest posts sent to your email.