- Brent crude oil dropped below $100 amid US-Iran diplomatic progress signs
- Oil prices recovered slightly after an earlier sharp 8% plunge in benchmarks
- US and Iran near a peace deal to end war, with key issues still unresolved
The Brent crude oil benchmark slipped below the $100 per barrel-mark on Thursday, May 7, reversing earlier gains as traders assessed signs of possible diplomatic progress between the US and Iran that could eventually ease disruptions in the Middle East. Earlier today, oil prices steadied after suffering their sharpest drop in weeks. The crude oil benchmark fell over 2% to $99.15 per barrel after inching gains above $102 earlier today, while West Texas Intermediate hovered near $94, dropping from $96 per barrel.
In early trade, the benchmarks recovered some ground after both benchmarks plunged nearly 8% in the previous session. Brent crude and WTI hit two-week lows led by heightened volatility on optimism over a possible end to the Middle East war on Wednesday. They pared losses, however, after US President Donald Trump said it was "too soon" for face-to-face talks with Tehran and a senior Iranian lawmaker said the US proposal was more of a wish list than a reality.
ALSO READ: Market Manipulation? $920 Million Crude Oil Shorts Placed Before US-Iran Deal News: Report
US-Iran near 'closing' deal to end war
Iran said it was reviewing a US peace proposal that would formally end the war while leaving unresolved the key US demands that Iran suspend its nuclear program and reopen the Strait of Hormuz. An Iranian foreign ministry spokesperson cited by Iran's ISNA news agency said Tehran would convey its response. Trump said he believed Iran wanted an agreement.
A Pakistan mediation source and another person briefed on the talks said an agreement was close on a one-page memorandum that would formally end the conflict, according to news agency Reuters. Additionally, US media outlet Axios reported that US expects Iranian responses on several key points in the next 24-48 hours, citing sources saying this is the closest the parties had come to an agreement since the war began.
Even if a peace deal is reached, oil supplies are expected to tighten further in coming weeks because it will take weeks for oil shipments to resume from the Gulf and reach refiners worldwide - so oil companies will continue to deplete storage tanks to meet peak summer demand. US crude and fuel inventories continued to decline last week as countries sought to offset supply disruptions caused by the Iran crisis, the Energy Information Administration said on Wednesday. Crude stocks fell by 2.3 million barrels to 457.2 million barrels last week, compared with analyst expectations in a Reuters poll for a 3.3 million-barrel draw.
ALSO READ: Iran Media Calls Peace Deal Report Speculative, Says 'Such Proposals Rejected In Recent Days'
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