Oil Prices Drop by 10% Amid Hopes of US-Iran Agreement

Washington, May 6: Tensions in the Gulf region may be easing as the United States and Iran approach a potential agreement. This news has led to a significant drop in oil prices, with a decrease of nearly 10% observed on Wednesday.

The US benchmark West Texas Intermediate (WTI) saw an initial plunge of about 10%, stabilizing later at approximately $94.32 per barrel. Meanwhile, the international benchmark Brent crude fell nearly 7%, settling around $102.14 per barrel.

According to a report by The New York Times, Brent crude later traded around $103, while WTI hovered near $96 per barrel, as investors reacted to signs of reduced tensions in the Gulf.

This market shift followed a report from Axios, indicating that Washington and Tehran are close to agreeing on a minor deal aimed at resolving the conflict that escalated in late February. The report suggested that significant progress could be made within the next 48 hours.

US President Donald Trump announced the halt of “Project Freedom,” a naval operation initiated earlier this week to ensure the safety of commercial vessels passing through the Strait. Following this operation, Iran reportedly launched new attacks on commercial ships and the US Navy.

Trump stated on social media that if Iran adheres to previously agreed terms, the conflict could end, allowing the Strait of Hormuz to remain open for all, including Iran. He also warned that failure to reach an agreement could lead to intensified bombing campaigns.

Despite some relief in the markets, tensions in the Gulf persist. Reports indicate that Iranian Revolutionary Guard warned vessels attempting to navigate the Strait of Hormuz that the route remains blocked.

Meanwhile, China has also initiated diplomatic efforts. Reports state that Chinese Foreign Minister Wang Yi met with Iranian Foreign Minister Mohammad Javad Zarif in Beijing, urging for stability in the region. China is a significant buyer of Iranian oil.

The ongoing conflict has resulted in rising fuel prices in recent weeks. The average price of gasoline in the US has reached $4.54 per gallon, while diesel prices have climbed to $5.67 per gallon.

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