Brent crude nears $110 as US considers Iran's peace proposal
What's the story
Brent crude oil prices have reached near $110 per barrel. This comes as the US considers Iran's latest proposal to end the ongoing conflict in West Asia. The increase in oil prices has led analysts to raise their forecasts amid fears of a prolonged supply disruption. Brent crude closed at $108 per barrel overnight after a 2% gain, while West Texas Intermediate (WTI) is trading near the $97 per barrel mark.
Diplomatic discussions
Trump holds meeting on Iran proposal
US President Donald Trump recently held a meeting to discuss Iran's proposal. However, he has maintained strict conditions for any deal, including ensuring that Iran does not get a nuclear weapon. Despite a ceasefire being in place for most of the month, ship transit through the key energy chokepoint has been nearly zero due to blockades enforced by both the US and Iran.
Proposal details
Iran's conditions for US deal
Iran's Foreign Minister Abbas Araghchi is expected to convey to Pakistan that the conflict could end if the US lifts its blockade, agrees to a new legal framework for traffic transit through the Strait of Hormuz, and guarantees that Iran will never face military action in future. However, US Secretary of State Marco Rubio has said that Iran still wants to control the Strait of Hormuz, which is not acceptable to the US.
Market predictions
Oil price forecasts raised by analysts
Goldman Sachs has revised its forecast for oil prices, expecting them to average around $90 per barrel in the fourth quarter of this fiscal year. This is an increase from its previous estimate of $80. The firm now expects Gulf exports to normalize by end-June, a delay from its earlier mid-May prediction. Meanwhile, Morgan Stanley predicts an average oil price of $110 per barrel this quarter, dropping to $100 next quarter and further down to $90 in Q4.