Global Oil Prices Drop Amidst Potential Iran Deal and Fed Meeting Focus

New York. International market crude oil prices have fallen significantly with signs that Iran's oil could return to the global market. This has increased expectations of lower inflation and also decreased government bond yields. Investors' attention is currently focused on the first policy meeting of the new chairman of the US central bank Federal Reserve (Fed), Kevin Warsh.

The international benchmark Brent crude oil price fell below $80 per barrel on Wednesday. On Wednesday, oil prices fell to their lowest level since the start of the US-Iran conflict. At the ICE Exchange's Comex division in London, Brent came down to $78.22 per barrel. This is 0.94 percent less than the market closing on the previous day.

Meanwhile, at the New York Mercantile Exchange's Comex division, West Texas Intermediate (WTI) prices are also being traded at $75.16 per barrel, down 1.09 percent.

According to a senior US official, the US is preparing to lift sanctions on Iranian oil under a peace agreement. This has increased expectations that millions of barrels of additional oil could be supplied to the global market. Following this news, US government bond yields have fallen.

The impact of this has also been seen in Asian markets. The yield on Japan's 10-year government bond fell by 1.5 basis points to 2.63 percent, while Australia's 10-year yield also fell by 5 basis points to 4.787 percent.

According to Kim Fustier, a senior energy analyst at HSBC Bank, the market is assessing the high probability of oil transportation from the Strait of Hormuz returning to normal. However, it is estimated that it may take until the end of September for this process to fully normalize.

Many details of the US-Iran agreement, reportedly to be signed on Friday, have not yet been made public. For the past three months, with movement in Hormuz almost halted, global oil storage has been under pressure. US oil inventories are said to have reached their lowest level since 1983.

Investors are currently waiting to see what signal Fed Chairman Kevin Warsh gives regarding interest rates. The market is anticipating interest rate hikes this year. According to analysts, the possibility of interest rates changing at this meeting is low. However, Warsh's press conference and the economic projections of Fed officials will be closely watched.

According to Xiao Cui, a senior economist at Pictet Wealth Management, Warsh may signal a patient monetary policy approach rather than providing immediate clear guidance.

If he supports the possibility of interest rates rising, the market will interpret it as a hawkish policy signal.