Oil prices slipped around 3% on investor hopes for an end to the US-Israeli war with Iran that could lead to a reopening of the Strait of Hormuz, following a ceasefire deal between Israel and Lebanon.
Brent futures were down $2.82, or 2.88%, at $94.99 a barrel, while US West Texas Intermediate crude was down $3.19, or 3.32%, at $92.83.
Israel and Lebanon said late last night that they had agreed to implement a ceasefire, raising hopes for a deal between Washington and Tehran, which has conditioned any agreement in part on an end to fighting between Israel and Lebanon.
“Iran insists on a halt to Israel’s aggression toward Lebanon, meaning Hezbollah, and indeed there does seem a breakthrough,” PVM Oil analyst John Evans said.
US President Donald Trump had suggested yesterday that there could be progress in negotiations with Iran as soon as this weekend.
Iranian Foreign Minister Abbas Araqchi yesterday said Tehran’s contacts with Washington have not been cut off, but no progress has been made in the negotiations, adding both sides were studying the texts that were exchanged.
In the US, the Republican-led House approved a resolution to block Trump from continuing the war against Iran. To take effect, the resolution would need Senate approval and two-thirds majorities in both chambers to override an almost certain Trump veto.
“In our view, the path of least resistance for prices remains to the upside as long as flows remain restricted,” UBS analyst Giovanni Staunovo said.
Meanwhile, US crude stockpiles fell by 8 million barrels to 433.7 million barrels in the week ended May 29, the Energy Information Administration said yesterday. That was a much bigger drop than the 4-million-barrel draw analysts had expected in a Reuters poll.
Slowing Chinese demand has also helped temper rising prices.
Iranian oil prices slipped into discounts for the first time since April, while Russian crude premiums eased as traders cut prices to entice Chinese buyers amid sluggish demand, trade sources said.
