Global oil prices crash after reports of breakthrough in US-Iran talks

Oil prices plunged after reports suggested the United States and Iran were close to an initial peace agreement that could end the war and reopen the Strait of Hormuz, easing concerns over disrupted crude supplies.

Brent crude futures fell $10.07, or 9.2%, to $99.80 a barrel by 1042 GMT, while US West Texas Intermediate (WTI) dropped $10.79, or 10.6%, to $91.48. Later, Brent crude slid 11.7% to $97 a barrel and WTI plunged 13% to $88.90 a barrel. Brent last settled below $100 a barrel nearly two weeks ago.

Both benchmarks were headed for their biggest daily declines in absolute terms in a month and touched their lowest levels in two weeks after also losing about 4% in the previous session.

Oil prices had surged in recent weeks as halted marine traffic through the Strait of Hormuz since the war began in February disrupted crude supplies. Brent crude last week reached its highest level since March 2022.

The closure of the strait also led to a drawdown in global oil and fuel inventories as refineries attempted to offset production shortfalls. Market sources, citing American Petroleum Institute figures on Tuesday, said US crude inventories declined for a third consecutive week, while gasoline and distillate stocks also fell.

The latest decline in oil prices followed reports that the White House believed Washington and Tehran were nearing an agreement to end the fighting. Prices had already weakened after US President Donald Trump hailed “great progress” towards a deal and paused his proposal, rejected by Iran, to guide ships through the blocked Strait of Hormuz.

Bob Yawger, director of futures trading at Mizuho Securities in the United States, expressed doubts about the prospects of a lasting agreement. “I am skeptical about an agreement for sure. We’ve been down this road before and it’s fallen apart,” he told CNN.

However, Yawger said he was more optimistic than some analysts that oil flows through the Strait of Hormuz could resume quickly if a deal was reached.

Meanwhile, Beijing renewed calls for an immediate end to the war during a meeting between China’s Foreign Minister and his Iranian counterpart Abbas Araghchi. China, the largest buyer of Iranian oil, is seen as having influence over the course of the conflict. Trump is due to travel to China next week for meetings with Chinese President Xi Jinping.