International oil prices plummet on US-Iran talks expectations... Brent crude down 7.8%

Ships in the Strait of Hormuz near Bandar Abbas, Iran

International oil prices plummeted on the 6th (local time) amid expectations that the United States and Iran are close to reaching an agreement.

On this day, the closing price of July Brent crude futures on the ICE Futures Exchange was $101.27 per barrel, a 7.83% decrease from the previous trading session.

On the New York Mercantile Exchange, the closing price of June West Texas Intermediate (WTI) crude futures was $95.08 per barrel, down 7.03% from the previous trading session.

Brent crude and WTI recorded their lowest levels since April 21st and April 24th, respectively. In terms of decline, both were the largest since April 17th.

This reflects the expectation of an end to the war between the United States and Iran.

US media outlets, including Axios, reported that the two countries are discussing the signing of a Memorandum of Understanding (MOU) to end the war.

The MOU is said to include a temporary halt (moratorium) on Iran's nuclear enrichment, the lifting of US sanctions against Iran and the release of some frozen funds, the gradual lifting of restrictions on Iran's passage through the Strait of Hormuz, and the gradual lifting of the US naval blockade of Iran.

US President Donald Trump stated in an interview with PBS that an agreement could be reached before his visit to China on the 14th-15th.

Iran announced that it is reviewing the US proposal and will convey its position to the mediating country, Pakistan.

Paola Rodriguez-Masiu of Rystad Energy said, "If an agreement is announced, futures prices will immediately fall further, and the mere expectation of an agreement is triggering a drop in oil prices."

However, he explained that "even if the Strait of Hormuz is restored, it will take time for global oil flows to normalize," adding that there would be a 6-8 week lag until normalization even after an agreement.