Iran deal hopes pushed oil prices to two-week lows on Monday, with Brent crude falling $4.71, or 4.55%, to USD 98.83 a barrel.
US West Texas Intermediate dropped $4.57, or 4.73%, to USD 92.03 a barrel, according to the source market data. Both contracts touched their lowest levels since May 7.
The decline followed President Donald Trump’s claim that Washington and Tehran had “largely negotiated” a memorandum of understanding on a peace deal. The proposed deal would reopen the Strait of Hormuz, which carried about one-fifth of global oil and liquefied natural gas shipments before the conflict.
Trump later said he had told US negotiators not to rush into an agreement with Iran. Al Jazeera also reported that Trump said the US blockade in the Strait of Hormuz would remain until a deal was reached.
MST Marquee analyst Saul Kavonic said the talks offered “some light at the end of the tunnel” for near-term oil price relief. However, analysts said damaged oil and gas facilities and restricted flows through the strait could take months to return to normal.
Read: US Iran Peace Deal Largely Negotiated, Trump Says
Risk assets also strengthened as oil fell. The euro rose 0.37% to USD 1.1646, the Japanese yen firmed to 158.85 per US dollar, Nasdaq futures gained 0.89%, and S&P futures rose 0.6%.
ATFX Global chief market analyst Nick Twidale said markets may take on more risk, but need confirmation that the Strait of Hormuz will reopen. Commonwealth Bank of Australia strategists said the main issue for markets was when and under what conditions the strait would reopen.
