World oil prices continued to decline after US President Donald Trump said that a peace deal between the United States and Iran could be agreed as early as this weekend.
The statement gave the market hope that the conflict disrupting global oil supplies could be resolved in the near future. Crypto Market
Following the development, Brent crude prices fell almost 2% before recovering some losses.
The price drop occurred as investors expected the important oil trade route in the Strait of Hormuz to be reopened if the two countries reached an agreement.
The Strait of Hormuz is a major route for oil and natural gas shipments from the Middle East to the rest of the world.
However, the situation remains uncertain. Tensions in the region continued when the US military reportedly shot down two Iranian attack drones that were allegedly approaching merchant ships.
At the same time, Iran warned that the Strait of Hormuz could be closed to all types of ships following the latest US military action.
Trump claimed that Iran's top leaders had agreed to the deal, but he acknowledged that the talks were not yet finalized.
Iran has reportedly not yet approved any official text of the agreement, indicating that several key issues remain to be resolved, including Iran's nuclear program and the country's frozen assets.
Market analysts say investors are increasingly convinced that both sides have more to lose if the talks fail than if they reach a compromise. Crypto Market
However, even if a deal is successfully agreed, global oil supplies will not immediately recover.
Shipping routes need to be secured, damaged energy facilities need to be repaired and some shut-down oil fields could take months to return to operation.
For now, the world oil market is still closely monitoring the progress of the negotiations because any changes could have a major impact on energy prices and global inflation.
