Global oil prices fell sharply on Tuesday as renewed peace talks between the United States and Iran eased fears of prolonged supply disruptions in the Middle East, with Brent dropping below $84 per barrel after trading above $100 last week.
- +Oil falls below $84 amid renewed US-Iran diplomacy efforts
Data from Oilprice.com showed that Brent, the global oil benchmark, declined from around $87 per barrel on Monday to approximately $83.92 on Tuesday, while the US benchmark, West Texas Intermediate, fell to about $79 per barrel.
Data from Oilprice.com showed that Brent, the global oil benchmark, declined from around $87 per barrel on Monday to approximately $83.92 on Tuesday, while the US benchmark, West Texas Intermediate, fell to about $79 per barrel.
The latest decline came as diplomatic efforts between Washington and Tehran gathered momentum, reducing concerns over a prolonged closure of the Strait of Hormuz, a critical global oil shipping route through which about a fifth of the world’s crude passes.
Oil prices had surged after the United States launched strikes on Iran on February 28 to stop Tehran from acquiring a nuclear weapon. The ensuing exchange of attacks disrupted shipping in the Gulf and led to the closure of the Strait of Hormuz, raising fears of a major supply shock in the global energy market.
The Strait of Hormuz was reopened last month when the US and Iran agreed to a ceasefire. But it was reclosed recently as the two countries exchanged strikes.
However, fresh developments on Tuesday signalled possible progress towards reopening the waterway.
Meanwhile, Reuters reported that Iran had proposed to Oman a temporary arrangement to reopen the Strait of Hormuz under which one direction of maritime traffic would pass through Iranian waters, while part of the opposite route would also transit Iranian territory.
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, told state television that Tehran rejected Oman’s proposal for an equal division of transit routes, arguing that such an arrangement failed to address Iran’s security concerns pending the achievement of long-term regional stability.
He warned that the Strait of Hormuz would remain closed if Muscat rejected Iran’s proposal, adding that Iran had never recognised the southern shipping route along Oman’s coast.
The prospect of renewed oil flows through the strategic waterway helped calm markets, reversing part of last week’s sharp rally.
Similarly, US President Donald Trump said negotiations with Iran were progressing well but warned that Washington was prepared to resume military action if diplomacy failed.
Speaking in an interview with Fox News on Tuesday, Trump said he would prefer to avoid further strikes but threatened to target Iran’s key infrastructure, including power plants, bridges and the underground “Kolang Mountain” nuclear facility, if no agreement was reached.
“I could knock out all their power plants in one day. About 91 million people would be left without electricity and without bridges. But if I can avoid doing that, I’d prefer for it not to happen,” Trump was quoted as saying.
Trump also claimed that most of Iran’s major bridges could be destroyed “in under two hours,” adding that Iranian officials understood the consequences if negotiations broke down.
The US president said Washington would no longer tolerate what it viewed as violations of agreements reached with Tehran, referring to a memorandum earlier signed between both countries.
Ahead of a meeting with Israeli Prime Minister Benjamin Netanyahu at the White House, Trump dismissed suggestions that he required Israeli intelligence regarding the “Kolang Mountain” facility, insisting that the US already had complete knowledge of the site.
He further claimed that previous American strikes had significantly degraded Iran’s nuclear programme by hitting facilities in Natanz, Fordow and Isfahan during last year’s conflict, warning that the underground facility would also be targeted if negotiations failed.
