Brent Crude futures slumped 4.8% to $94.85 per barrel, after an alleged leak of the draft memorandum of understanding for the peace deal between US and Iran on Wednesday. The draft for the peace deal has been reportedly accessed by Iranian State TV, that reported that it included the US withdrawing its forces from Iran in exchange for the latter restoring Strait of Hormuz transit points to their pre-war condition.
West Texas Intermediate futures declined 4.6% to $89.55 per barrel by 9:11 a.m. ET, while Brent crude oil slid 3.75% to $95.85.
ALSO READ: US To Exit Persian Gulf, End Hormuz Blockade Under Draft MoU, Iran State TV Reports
Some of the salient points in the draft MOU, were as follows: military vessels not being included in the draft agreement, the management and route of ship traffic via the Strait of Hormuz being handled by Iran in collaboration with Oman.
It further stated that if a final deal is reached within 60 days, this agreement will be approved in the form of a binding UN security council resolution.
Iran's State TVs said that the Islamabad Memorandum framework is not yet finalized and that no step will be taken by Iran without tangible verification.
This development comes after Brent crude futures had been dipping in the previous day, due to tensions noted between Iran and the US.
Benchmark Brent for July delivery surged more than 4% to trade near $100.12 at around 11:30 am EST. This came after Iranian Supreme Leader Mojtaba Khamenei issued a statement, noting that there will be no safe haven for the US military in the Middle East.
ALSO READ: Brent Reclaims $100 As Oil Market Sees Uncertainty In US-Iran Peace Talks
His statement came hours after US forces carried out overnight “defensive strikes” on an Iranian missile site and two Islamic Revolutionary Guard Corps (IRGC) mine-laying boats.
According to industry experts cited by CNBC, the flow of oil would take four months to reach 80% of pre closure levels, assuming the conflict ends immediately. They said it would take until the first or second quarter of 2027 for oil flow to fully normalise.
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