Crude Reverses Course on Iran Deal Hopes, Traders Still Eye $150

In yet another swing, the oil market dipped 5% on Wednesday following hopes of a ceasefire that could de-escalate the situation in West Asia and ease supply disruptions. Crude prices slumped to $98.28 per barrel in early trade following reports that the US had sent Iran a 15-point proposal aimed at ending the ongoing conflict. US President Donald Trump said Washington and Tehran are “currently in negotiations” and signalled that Tehran is eager for conflict resolution and signing a peace deal, though the country has denied holding any direct talks with the White House, reports said.

The global oil market has been extremely volatile since military actions escalated on February 28, and both benchmarks, Brent crude and West Texas Intermediate (WTI), surged to multi-year highs and hovered near $150 per barrel. The International Energy Agency, the US, along with other countries, had to release emergency stockpiles of crude to prevent oil prices from breaking $150 per barrel, as such a situation could trigger a massive global economic slowdown and a recession phase. Analysts and market participants have warned that if the war prolongs beyond April, the likelihood of crude hitting $150 per barrel remains high amid concerns over supply disruptions.

As per reports citing Israel’s Channel 2, the 15-point proposal the US sent includes a one-month ceasefire to allow discussions, along with provisions for dismantling Iran’s nuclear programme, reopening the Strait of Hormuz, and ending support for proxy groups. On Tuesday, Reuters reported that Iran has told the United Nations Security Council and the International Maritime Organization that “non-hostile vessels” may transit the Strait of Hormuz if they coordinate with Iranian authorities. The note from Iran’s Ministry of Foreign Affairs was sent to the UNSC and UN Secretary-General Antonio Guterres on Sunday.

“Non-hostile vessels, including those belonging to or associated with other states, may — provided that they neither participate in nor support acts of aggression against Iran and fully comply with the declared safety and security regulations — benefit from safe passage through the Strait of Hormuz in coordination with the competent Iranian authorities,” it read.

Despite possible signs of de-escalation, reports have suggested that military activities continued between the US, Israel, and Iran. As per reports citing sources, Washington is also preparing to deploy additional troops to the region. Markets remain highly sensitive to geopolitical developments, with any breakthrough or escalation in West Asia likely to drive sharp swings in crude prices in the near term.