• Further pump price slump expected amid 3-month low
Emmanuel Addeh in Abuja
Crude oil prices fell below $80 a barrel yesterday for the first time since March, in a sign of traders’ growing confidence that the deal struck between the US and Iran will restore the flow of crude through the Strait of Hormuz.
Brent crude, the international benchmark, slumped 5.5 per cent to $78.58 a barrel, its lowest level since March 3, while West Texas Intermediate (WTI), the US benchmark, dropped 6.3 per cent to $75.66 a barrel.
The development is coming after Washington and Tehran agreed late on Sunday to extend their ceasefire and reopen the strait, which in effect has been shut since late February, after several weeks of fraught negotiations brokered by Qatar and Pakistan.
Also, Middle Eastern oil prices have slumped since the peace deal was announced. Abu Dhabi’s Murban crude fell as low as $72.74 a barrel on Tuesday, just 49 cents higher than before the war began, after surging to as much as $160.50 in March. Prices of Dubai and Oman oil also fell this week.
Two Iranian tankers, the Hero II and the Diona, sailed out of the Gulf of Oman and passed the nominal US blockade line on Tuesday, the first sign of Iranian oil beginning to move unchallenged by the US military since the restrictions began. Neither was signalling its final destination but both appeared to be heading south-east around India, an FT report said.
The price of crude surged after the US and Israel launched their assault on Iran on February 28, sending the price from $72 a barrel on the eve of the conflict to as high as $126 in April. Hopes of a peace deal have repeatedly been dashed in recent weeks, causing dramatic fluctuations in the price of oil.
Oil traders have consistently warned that it could take as many as three months for ship traffic through the crucial chokepoint to return to pre-war levels.
“Markets clearly welcome the latest development, although how quickly traffic through the strait can normalise remains to be seen,” said analysts at UBS. “Given worries about sea mines in the waterway, markets will look for clearer evidence that shipping companies and insurers have sufficient confidence to traverse the strait,” they said.
Goldman Sachs on Monday trimmed its oil price forecast following the US-Iran deal, the signing of which is scheduled for Friday. The bank now expects Brent to trade at $80 a barrel in the final quarter of 2026, $10 lower than its previous prediction.
“While full details on the agreement are unclear, we now assume that Persian Gulf exports normalise to pre-war levels by the end of July (vs end of August previously),” said analysts at Goldman, quoted by FT.
On Tuesday, Trump said the text of the US-Iran deal would be made public soon, but doubts have continued to swirl around the interim agreement to end the war.
Aside from Goldman Sachs, after news of the preliminary agreement on Monday, investment banks, Morgan Stanley and Citi, also lowered their oil price forecasts.
