Oil prices fall below $80 for first time since March
What's the story
Oil prices have started to cool off, falling below $80 per barrel for the first time since early March. The decline comes after a US-Iran peace deal was announced earlier this week, raising hopes of renewed oil flows through the Strait of Hormuz. At 7:00am IST today, West Texas Intermediate (WTI) crude was trading at $76.46 per barrel while Brent crude stood at $79.41 per barrel. Since the announcement of the peace deal, both benchmarks have dropped by some 5%.
Agreement details
US-Iran deal yet to be finalized
The US-Iran memorandum of understanding, which has not been made public yet, extends a fragile ceasefire first announced in April by another 60 days. The proposed arrangement would see the US lift its blockade on Iran's ports while Tehran would allow oil tanker traffic through the Strait of Hormuz. However, industry officials have warned that restoring production and refining activity to pre-war levels could take weeks, months, or even years.
Strategic concern
Concerns over Iran's control of the Strait of Hormuz
US intelligence agencies have warned that Iran could effectively close the Strait of Hormuz at will. "We have now handed Iran de facto control over the strait - a weapon more powerful than any nuke," one source familiar with the US intelligence assessments told CNN. The findings suggested that Iran's actions during the recent conflict had shown both intent and capability to close this vital waterway, which carries 20% of global oil and liquefied natural gas exports.