Oil Prices Ease Amid Hopes for Iran Nuclear Deal Following Israel-Lebanon Ceasefire Agreement
Oil Prices Plummet 3% Amid Ceasefire Deal Between Israel and Lebanon
HOUSTON - Oil prices declined by around 3% on Thursday, following a ceasefire deal between Israel and Lebanon, which has raised hopes for a resolution to the U.S.-Israeli war with Iran and a possible reopening of the Strait of Hormuz. This development has led to a significant drop in oil prices, with Brent futures settling down $2.78, or 2.84%, at $95.03, while U.S. West Texas Intermediate crude settled down $2.98, or 3.1%, at $93.04.
The market is reacting positively to the news, with investors hoping that the ceasefire deal will pave the way for peace talks between the U.S. and Iran. The decline in oil prices is a significant reversal from Wednesday's gains, when the two contracts rose about 2% following renewed Middle East hostilities, including Iranian attacks on Kuwait and U.S. military strikes near the Strait of Hormuz.
| Contract | Wednesday's Price | Thursday's Price | Change |
|---|---|---|---|
| Brent Futures | $97.81 | $95.03 | -$2.78 (-2.84%) |
| U.S. West Texas Intermediate Crude | $96.02 | $93.04 | -$2.98 (-3.1%) |
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The Strait of Hormuz remains closed, but some ship repositioning has been observed, indicating that an opening may occur sooner rather than later. The Republican-led U.S. House of Representatives approved a resolution on Wednesday to block Trump from continuing the war against Iran, but the resolution would need Senate approval and two-thirds majorities in both chambers to override an almost certain Trump veto.
Meanwhile, U.S. crude stockpiles fell by 8 million barrels to 433.7 million barrels in the week ended May 29, a much bigger drop than the 4 million-barrel draw analysts had expected. Iranian oil prices slipped into discounts for the first time since April, while Russian crude premiums eased as traders cut prices to entice Chinese buyers amid sluggish demand.
OPEC expects robust oil demand growth and is not changing its estimates, despite the Middle East conflict and closure of the Strait of Hormuz. This is according to Secretary General Haitham Al Ghais, who spoke at the St Petersburg International Economic Forum on Thursday.
Investor Takeaway
Oil prices may continue to fluctuate based on developments in the Iran nuclear deal and Middle East conflicts.
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