Crude Oil Goes Below $95 As US-Iran Engage In Peace Talks

Crude oil prices edged lower on Thursday as tensions in West Asia are expected to ease. Markets reacted to signs of progress in talks between the US and Iran.

Brent crude slipped a bit and hovered just below the $95 ($94.49 per barrel) mark, while US West Texas Intermediate (WTI) crude also moved downward near the $90 ($90.59 per barrel) range. The decline followed a few hectic sessions when prices had jumped due to worries about supply disruptions.

One of the main reasons for this cooling is the chance that Iran may let a few ships pass near the Strait of Hormuz if talks between the two countries progress. This is a very strategic sea route since one-fifth of the world's oil passes through it.

Talks In Focus, Risks Still Alive

Officials from both sides are looking at the option of fresh talks. At the same time, quiet backchannel efforts are on to avoid any further escalation. While there is cautious optimism, there is no final agreement yet.

The conflict has already caused interruptions in the region, and if there is any new escalation, prices might shoot up again very fast. At the moment, the market is responding more to the expectations of de-escalation rather than the real changes on the ground.

Also Read - Wipro To Acquire Select Alpha Net Customer Contracts For Up To $70.8 Million

What Experts Are Indicating?

Market participants expect oil to remain volatile in the near term. Prices could swing within a wide band depending on how the situation evolves.

Even if tensions cool down, the price of crude might not experience a significant drop. Most experts anticipate that the price will be supported at a certain level because supply will continue to be uncertain. Any postponement in getting the oil supply back to normal could cause a price surge again.

In short, while the recent dip offers some relief, the situation remains fragile and closely tied to geopolitical developments.

Source:

The Economic Times