Oil prices slipped to a three-month low on Monday after U.S. President Donald Trump and Iran’s deputy foreign minister said they had reached an initial deal to end the war and to resume traffic through the Strait of Hormuz.
Brent crude futures fell $3.65, or 4.2%, to $83.68 a barrel by 0630 GMT and U.S. West Texas Intermediate was at $80.75, down $4.13, or 4.9%. Both contracts fell to their lowest levels since March 10 on Monday after tumbling more than 3% on Friday.
The U.S. and Iran will sign a memorandum of understanding in Switzerland on Friday, said the prime minister of Pakistan, whose country has served as a mediator. Trump said on Sunday that the Strait of Hormuz would be open "toll free" and that a U.S. naval blockade of Iranian ports would also end.
Iran’s semi-official Mehr news agency said the draft deal called for reopening the Strait of Hormuz within 30 days under Iranian arrangements.
"The geopolitical risk premium that had been built into crude is now being unwound quite aggressively as traders price in the prospect of restored oil flows," said Tim Waterer, chief market analyst at KCM Trade.
The world has lost millions of barrels of oil and gas supply since the war closed the Strait of Hormuz, a chokepoint for a fifth of the world’s oil and liquefied natural gas supplies, for more than three months.
Source : Investing.com