West Texas Intermediate (WTI) crude oil fell for a third-straight session on Thursday but rose off the day's low on uncertain prospects for a potential peace deal between the United States and Iran.
WTI crude oil for June delivery closed down US$0.27 to settle at US$94.81 per barrel, after earlier touching US$89.85. July Brent oil was last seen down US$0.67 to US$100.60
The drop, which follows on Wednesday's 7% fall for WTI prices, comes amid rising optimism the United States and Iran are closer to a peace deal. However the outlook for a deal is uncertain. The Guardian reported while U.S. President Trump is saying a deal is "very possible", Iranian media are reporting is only reviewing the proposal and considering its response.
There is no certainty talks will result in a deal between the two countries that will see a quick reopening of the Strait of Hormuz, the chokepoint for exports from Persian Gulf nations that supplied 20% of the world's daily oil demand. More than 1,000 ships have been trapped in the Gulf since the Feb. 28 start to the war and supplies of oil, refined products, LNG, fertilizer and other commodities are running short.
"We should not be too optimistic about immediate agreement. A spokesperson for the Iranian finance ministry pushed back yesterday, calling parts of the US framework "ambitious and unrealistic proposals". So far, Tehran's wish list: set out in its 14-point response on May 2, is unchanged: full sanctions relief, release of frozen state assets, ~$270bn in reparations / reconstruction financing ("only way" to end the conflict), and a new multilateral mechanism for the SoH (Strait of Hormuz) that effectively recognizes Iranian sovereignty over it," Ole Hvalbye, a commodities analyst at SEB Research, wrote.