Crude oil prices saw sharp correction on Wednesday as hopes of a possible truce between Iran and the United States were reignited after an axios report claimed that a peace deal could be inked soon.
Brent crude slumped over 7% to $100.5 per barrel, while West Texas Intermediate slid nearly 10% to $92.25 a barrel. Later the global crude benchmark breached the $100 to trade over 9% lower at $99.79 per barrel.
Oil prices have been on frenzy and spiralled dramatically ever since the United States and Israel launched joint air strikes on Iran on Feb. 28.Global benchmark brent crude has time and again crossed the landmark $120 per barrel level in the past two months.
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The White House believes it's close to a one-page, 14-point memorandum of understanding with Iran to end the war and curate a framework for detailed nuclear talks, two US officials along with two other sources told news agency Axios.
If this deal actually carries through, it would finally put an end to the fighting in the region and kick off a month-long push to settle the turmoil in West Asia. The main goals of the deal, as per reports, are to get the Strait of Hormuz back open, cap Iran's nuclear program, and get the US to drop its sanctions.
Basically, Iran would agree to pause its nuclear enrichment for a while by commiting to a moratorium, and in exchange, Washington would lift those sanctions and release their frozen funds. Both sides would also have to stop making it so difficult for ships to move through the Strait.
As of now, nothing has been finalised but Iranian responses on key points are expected within 48 hours. In the meantime, US officials are reportedly saying the leadership in Tehran is quite split on the deal, and plenty of people are skeptical about it being inked.
It is a high-stakes situation, too— if these talks fall apart, the US may resume the blockade or even resort to military action. Islamabad and Geneva are the two potential locations for the possible meeting.
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