US-Iran tensions ease, world oil prices plummet across the board.
On the morning of July 27, world oil prices saw a sharp decline after the US and Iran temporarily halted their retaliatory military attacks. This move raised hopes of restoring the ceasefire and reopening the Strait of Hormuz, thereby easing concerns about disruptions to the global energy supply chain.
At the start of trading this week, both benchmark crude oil prices recorded sharp declines. At one point, Brent crude lost more than 7% of its value, falling below $90 per barrel before recovering slightly.
According to the latest data updated on the morning of July 27, North Sea Brent crude oil prices fell 3.9%, trading at $92.97 per barrel, while US WTI light sweet crude oil fell 4.3%, retreating to $85.45 per barrel.
This easing of tensions comes shortly after 13 days of escalating conflict in the Middle East. Over the weekend, Washington decided to temporarily halt military actions targeting the Islamic Republic. The US ambassador to the United Nations also confirmed that President Donald Trump is seeking to "create space for negotiations."
In response to this gesture of goodwill, Tehran announced it would suspend retaliatory attacks against neighboring countries in the region.
Iranian Foreign Ministry spokesman Esmaeil Baqaei said talks with Oman on managing the Strait of Hormuz are making positive progress. The discussions are focusing on "common principles and operating mechanisms" to ensure the safety of ships transiting the strait while respecting the sovereign rights of the states involved.
In addition, diplomatic sources revealed that Pakistan is considering the possibility of resuming its role as a mediator in peace talks between the US and Iran, under an initiative launched by China.
Analyst Sally Auld from the National Australia Bank (NAB) believes that the Middle East situation is shifting in a more optimistic direction, seemingly creating pressure on both sides to de-escalate tensions.
The plunge in oil prices has helped alleviate concerns about a resurgence of inflation and the prospect of central banks continuing their interest rate hike cycle, thereby creating a general boost in most stock markets.
