Crude oil prices fall to three-month low on hopes of opening Strait of Hormuz

Crude oil prices fell about 5% to their lowest in three months after details of a temporary agreement to end the war in the Middle East and reopen shipping through the Strait of Hormuz were announced.

This was reported by Reuters.

Brent crude futures fell $4.21, or 5.1%, to $78.96 a barrel. At the same time, U.S. West Texas Intermediate (WTI) crude lost $4.70, or 5.8%, to $76.05 a barrel.

“Crude oil prices are falling rapidly on hopes that the Strait of Hormuz will soon open,” Bob Yawger, head of energy futures at Mizuho, ​​said in a note.

Details of the temporary agreement to end the war began to emerge the day before. President Donald Trump said the deal would prevent Tehran from obtaining nuclear weapons. At the same time, Iran will be able to sell oil after the deal is signed.

The document provides for an extension of the ceasefire announced in April for another 60 days, as well as the opening of the Strait of Hormuz, which Iran effectively blocked after the first US and Israeli strikes on Iran.

“Very little is known at this time about such details of the document as financial compensation, sanctions and especially the nuclear deal, which was largely the cause of the war,” analysts at consulting firm Ritterbusch and Associates said in a note.

The news of the preliminary agreement prompted a number of investment banks, including Goldman Sachs, Morgan Stanley and Citi, to revise their forecasts for the price of crude oil downwards.

Tags: prices