US-Iran Peace Talks Signal Lower Oil Prices

London. With positive signals emerging about a peace deal between America and Iran, the price of crude oil fell to its lowest point in two weeks in the international market on Monday. 

Although differences between the two countries still remain on key issues, the positive talks have brought enthusiasm to the market. The hope of a deal has helped reduce prices, especially at a time when oil supply from the Middle East is being affected due to the blockade in the Strait of Hormuz.

In the international market on Monday, the price of Brent crude fell by $4.71 per barrel, or 4.55 percent, to $98.83. Similarly, the price of American West Texas Intermediate (WTI) also fell by $4.57 per barrel, or 4.73 percent, to $92.03. The prices of both types of crude oil are the lowest since May 7.

Last Saturday, US President Donald Trump had said that an understanding for a peace deal between Washington and Iran had been reached on 'most points'. If this deal is implemented, the Hormuz waterway will be reopened. Before the current conflict began, one-fifth of the total crude oil and liquefied natural gas (LNG) supplied worldwide used to be transported through this waterway. However, as both sides are still unclear on complex issues, Trump clarified on Sunday that he had instructed his representatives not to rush the deal.

Saul Kavonic, an analyst at MST Marquee, commented that although many risks and warnings remain regarding the deal and the reopening of the Hormuz waterway, some light is visible at the end of the long tunnel. He said that this positive development would provide relief in oil prices, at least in the short term. 

However, other market analysts have estimated that even if the waterway is opened, it will take several more months for oil flow from that region to return to normal and for the oil and gas infrastructure damaged by the conflict to be repaired.