By Our Correspondent
A temporary ceasefire agreement between the United States and Iran has triggered a sharp decline in global oil prices, offering relief to energy markets that had been rattled by fears of prolonged conflict in the Middle East.
Oil prices fell to their lowest levels since hostilities erupted between the two countries, as investors responded positively to signs of easing tensions and the prospect of increased crude supplies returning to the international market.
Brent crude dropped 1.9 per cent to $78.02 per barrel, while U.S. West Texas Intermediate (WTI) crude lost 2.9 per cent to trade at $74.57 per barrel, reflecting growing confidence that major disruptions to global oil shipments may be avoided.
The market reaction followed the signing of a memorandum of understanding between Washington and Tehran, which established a framework for negotiations and measures aimed at restoring stability in the Gulf region.
Central to the agreement is the reopening of the Strait of Hormuz, a vital shipping route through which a significant portion of the world’s oil and gas supplies pass. Iran has agreed to allow unrestricted passage through the waterway during a 60-day negotiation period, reducing fears of supply bottlenecks that had previously driven prices higher.
Analysts say the agreement could pave the way for a gradual return of Iranian crude exports and the recovery of Gulf oil flows disrupted by the conflict.
Financial institutions are already forecasting a rebound in regional oil exports. Goldman Sachs expects Gulf crude shipments to return to pre-conflict levels by the end of July, with full production recovery anticipated by October.
However, experts caution that while prices have retreated, they are unlikely to collapse. Strong global demand and lingering supply challenges are expected to keep crude prices relatively firm in the coming months.
BNP Paribas estimates that oil prices could stabilize around $75 per barrel, suggesting that the market remains sensitive to geopolitical developments despite the easing of immediate tensions.
The latest price decline underscores how diplomatic progress between major geopolitical rivals can swiftly influence global commodity markets, easing pressure on consumers and businesses that depend on stable energy supplies.
