Oil prices fell by more than $2 per barrel on Thursday after the U.S. and Iran signed an interim agreement that would end the Iran war, reopen the Strait of Hormuz and waive US sanctions on Tehran’s oil, boosting the oil supply outlook.
Brent crude futures were down $2.14, or 2.69%, at $77.41 a barrel as of 0616 GMT, and US West Texas Intermediate fell $2.36, or 3.07%, to $74.43 a barrel.
Brent sank to its lowest since March 2, which was the first day of trading after the US and Israel began attacking Iran, while WTI was at its lowest since March 4.
The benchmarks resumed their decline, reversing a jolt higher on Wednesday that followed comments from U.S. President Donald Trump saying he could resume his bombing campaign if Iran’s leaders “don’t behave”.
“The sell-off extended as energy markets continued to aggressively price in a faster-than-expected return of Iranian barrels following the recent US-Iran memorandum of understanding,” IG market analyst Tony Sycamore said in a note.
The 14-point memorandum begins a 60-day negotiation period during which Iran will allow toll-free passage through the Strait of Hormuz, a key oil and gas shipping lane. The deal calls for traffic through the strait to be restored to its full capacity within 30 days.
