Oil prices fell sharply during trading on Monday, after markets began to react to reports that the United States and Iran were close to a preliminary agreement that could end the war between them and restore calm to the region.
According to the New York Times, the two sides reached a preliminary understanding that includes halting military escalation and fully reopening the Strait of Hormuz to navigation, while the discussion of the Iranian nuclear file was postponed to a later stage of the negotiations.
Despite the optimism that has prevailed in the markets, the agreement has not yet been officially finalized, as it still needs the approval of US President Donald Trump and Iranian Supreme Leader Ali Khamenei.
The Associated Press also reported that the potential agreement could open the door for the return of Iranian oil exports to the markets, by easing sanctions and releasing frozen Iranian funds, in exchange for negotiations continuing for 60 days.
This news caused oil prices to fall sharply, as concerns about disruptions to global supplies and the possibility of increased oil supply in the coming period eased.
Brent crude fell by about 5.55%, losing $5.77 to reach $97.77 a barrel, while US crude Nymex dropped by 5.85%, or $5.65, to settle at $90.95 a barrel.
Observers believe that markets are now moving in accordance with any new political development, especially given the sensitivity of the Strait of Hormuz issue and its direct impact on energy traffic and oil prices globally.
