Oil prices showed the sharpest decline since June last year. The market stabilized after official statements from Washington about its intention to refrain from immediate military action against Iran, which removed the threat of large-scale disruptions in energy supplies. This is reported by Bloomberg, writes UNN.
Details
The price of American West Texas Intermediate (WTI) crude oil fell by 4.6%, dropping below the $60 per barrel mark. A similar situation is observed with North Sea Brent blend, whose value decreased by 4.2% and settled at $63.76 per barrel. This drop completely negated the five-day rally caused by fears that the US would attack Iran due to the brutal suppression of anti-government protests.
Factors of de-escalation and the role of diplomacy
The main factor in the reduction of the "risk premium" was the news of diplomatic efforts by US allies. According to the New York Times, Israeli Prime Minister Benjamin Netanyahu personally asked Donald Trump to postpone plans for a military strike to allow time for strengthening the region's defenses.
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In addition, President Trump himself stated that he had received information about the alleged cessation of killings of demonstrators in Iran, which became a formal reason for a pause in military planning.
Overall market condition and additional risks
Despite the reassurance regarding Iran, other areas of tension remain in the market. In particular, the situation in Venezuela, where the US maintains control over Caracas' oil revenues, creates some uncertainty. Prices are also pressured by limited exports through the CPC terminal in the Black Sea due to infrastructure damage in Kazakhstan. At the same time, data on an unexpected increase in US crude oil inventories by 5.23 million barrels further strengthened bearish sentiment among traders.
Analysts predict that prices will remain at the current level until the end of the week, unless new triggers emerge in relations between Washington and Tehran.
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