Shafaq News
Oil prices settled 5% lower on Wednesday as investors awaitedupdates on a framework of a deal between the United States and Iran on endingtheir conflict and reopening the Strait of Hormuz.
Brent crude futures settled $5.29, or 5.31%, at $94.29 a barrel,while U.S. West Texas Intermediate crude lost $5.21, or 5.55%, to $88.68.
Both benchmarks touched their lowest in a month earlier in thesession. The losses more than erased Brent's gains from Tuesday.
U.S. Secretary of State Marco Rubio said there has been someprogress in negotiations with Iran toward a deal. However, President DonaldTrump said the U.S. and Iran still have issues to resolve in peace talks,while Iran's Fars News has said unresolved issues remain.
Washington also dismissed an Iranian state television report of aframework deal to restore shipping through the Strait of Hormuz within a monthand to lift a U.S. naval blockade on Iranian ships. The U.S. will withdrawmilitary forces from the vicinity of Iran and lift its naval blockade, Iranianstate TV said, adding that the management of ship traffic through the Strait ofHormuz will be handled by Iran in cooperation with Oman.
"A leader from the Iranian military stated that thepossibility of returning to war is low, which has many traders believing apeace deal is getting closer ... It seems the extremely tight global suppliesthat had been factored into crude are beginning to lessen," said DennisKissler, senior vice president of trading at BOK Financial.
Traffic through the Strait of Hormuz also continued with an oilproducts tanker operated by Chinese shipping group COSCO in the process ofcrossing the chokepoint on Wednesday, after two crude tankers sailed in thepast day, although oil traffic overall was still limited, shipping data showed.
"The increase in shipping activity is reinforcingexpectations that the critical waterway could gradually reopen, potentiallyrestoring disrupted global energy flows and reducing near-term supply riskpremiums," said Mark Schaefer, a director at brokerage Liquidity Energy.
July Brent futures had risen 3.6% in the previous session after theU.S. carried out new strikes in Iran, hurting hopes that had risen over theweekend that Washington and Tehran would reach a peace deal. Israel ramped upbombing in Lebanon on Tuesday, further straining peace efforts.
After an April ceasefire in the three-month-long conflict, bothsides indicated they had made progress in talks toward reopening the strait.
Iran's effective closure of the Strait of Hormuz has taken morethan 14 million barrels per day of Middle East oil supply offline, accordingto the International Energy Agency.
In a sign of demand weakening, India's two largest airlines sharplycut planned domestic flights for June and July, sources familiar with thematter said.
(REUTERS)
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