Oil prices experienced a sharp decline following comments from President Trump indicating that the United States is in the 'final stages' of negotiations with Iran, with no sanctions relief to be granted until a deal is formally signed and a warning of swift military action if talks fail [1]. This development eased geopolitical risks related to the US-Iran conflict and the disruption of energy flows through the Strait of Hormuz, which had previously driven global long-bond yields to post-2008 highs and pressured oil-importing Asian currencies [1].
WTI crude fell as much as 7%, settling at $98.26 per barrel, while Brent settled at $105.10 per barrel in response to these headlines [1]. ING analysts Warren Patterson and Ewa Manthey noted that the Brent market remains highly sensitive to Iran-related news, with prices dropping sharply on renewed hopes of a US-Iran agreement and improved tanker flows through the Strait of Hormuz [2].
According to ING, their base case projects Brent averaging $104 per barrel this quarter, with expectations for prices to ease into the $90s later in the year, contingent on recovering Persian Gulf exports and assuming Strait of Hormuz oil flows reach around 4 million barrels per day by the end of May [2]. However, as of Wednesday evening, Iran was reportedly still reviewing the text of any proposed agreement and had not yet formally responded, leaving uncertainty about the durability of the price rally [1].
Both sources emphasize that the market's outlook hinges on the continuation of improved tanker flows through the Strait of Hormuz and the successful conclusion of US-Iran negotiations [1][2]. ING analysts state that the trend of tankers passing through the Strait must continue for their base case to hold [2].
CONCLUSION
Oil prices dropped sharply on hopes of a US-Iran deal, with Brent and WTI settling lower as geopolitical risks eased. Market sentiment remains cautious, with future price trends dependent on the outcome of negotiations and sustained recovery in Persian Gulf oil flows.