Oil prices keep sliding, reflecting hopes for stability in energy markets as a US-Israel-Iran deal looms. By 08:00 GMT Wednesday,Brent crude futures for August delivery fell nearly 1%,settling at $78.24 barrel. Lowest since March 3 .
Prices dropped roughly 5% each of last two days. They had surged over 50% during the conflict,now just 7% higher than before US and Israel strikes on Iran began February 28 .
Tamas Varga of PVM Oil Associates in London gave a cautious view, stating,“The immediate prognosis, it seems,is positive and assumes no major setbacks.” Brent crude fell by $17 per barrel over last four sessions,indicating market feels worst disruptions may be over .
Vandana Hari,founder of Vanda Insights in Singapore,warned that while the US-Iran memorandum of understanding (MoU) announcement calmed markets,real test lies ahead. “The hardest part – on delivering the pledges and promises – is yet to come,” she said. She noted the current price drop is driven by sentiment,as market expects reopening of Strait of Hormuz.
The MoU, to be signed Friday,aims to end Iran's near-total closure of Strait of Hormuz in exchange for the US lifting its blockade on Iranian ports . This reopening could restore confidence in global energy supply chains,hit hard over past four months.
Right now,maritime traffic through strait, key route between Iran and Oman,has been severely reduced due to Iranian threats. Estimated daily loss: 14 million barrels in global oil supply. Even if conflict ends,experts say full recovery of energy flows will take months.
Over 500 vessels reportedly waiting to exit the Gulf Stephen Cotton, general-secretary of the International Transport Workers’ Federation, stressed that Geneva signing ceremony is just the start of a long road to normalcy. “The backlog of stranded vessels and the need for crew changes and rest mean a realistic return to normal shipping patterns is weeks, if not months,away,” he said Monday.
As market reacts to these moves,analysts remain on alert . Logistical hurdles and renewed geopolitical tensions could still affect oil prices and supply chains soon…
