Oil traded sharply lower midafternoon Monday, falling more than 6% as peace negotiations between Iran and the Untied States continue, raising hopes for a deal that will reopen the blockaded Strait of Hormuz.
West Texas Intermediate crude oil for July delivery was last seen down US$6.21 to US$90.39 per barrel in electronic trade, with markets closed for the Memorial Day holiday, July Brent oil was down US$7.40 to US$96.14.
The drop comes as the countries continue talks to end the war that has kept the Strait closed for nearly three months, blocking much of the 20% of daily oil demand supplied by Persian Gulf nations. The Wall Street Journal reported Iran is willing to lift its blockade of the Strait in exchange for the United States ending its blockade of Iranian ports, though Iran warned a final deal is not imminent.
The closure of the Strait has boosted oil prices to four-year highs, raising inflation and pressuring U.S. President Trump to come up with a deal to end the war as the high-demand U.S. driving season begins with today's Memorial Day holiday, further squeezing supply.
"Both Trump and Iran have strong reasons to find a quick way out of the war and crisis, for economic, financial, political and military reasons," SEB Research noted.