LAGOS MAY 23RD (NEWSRANGERS)-Oil prices abruptly reversed course Thursday afternoon, turning from gains to losses on news that the US and Iran may be only hours away from announcing terms for peace negotiations.
Futures on Brent crude (BZ=F), the international benchmark, fell 2.6% to trade around $102.30 per barrel after gaining as much as 3.5% before the news broke. Those on US benchmark WTI crude (CL=F) fell 2.5% to trade below $96 after rising as much as 4% earlier in the session.
The US and Iran have reached an agreement, mediated by Pakistan, that includes a full ceasefire — including any targeting of infrastructure — “freedom of navigation” in the Persian Gulf and Strait of Hormuz, and a gradual lifting of economic sanctions on Iran, the Iranian semi-official news agency ILNA said in a post on Telegram.
While the post from the ILNA made no mention of Iran’s nuclear enrichment program, it stated that negotiations on “outstanding issues” would begin within seven days. US and Iranian negotiators have been working toward an agreement that would bring both parties back to the table for second-round negotiations after a first round fell apart in mid-April.
The losses marked a sharp change of course for oil prices that had originally risen on Thursday after Iranian Supreme Leader Mojtaba Khamenei said the regime’s stores of enriched, near-weapons-grade uranium shouldn’t be sent abroad, throwing a wrench into dealmaking between the US and the Islamic Republic.
The development complicates negotiations between Iran and the US, where the White House has said the removal of Iran’s enriched uranium supply is a key red line for any deal.
Trump has repeatedly stated his belief that Iran can’t develop nuclear weaponry and that the US must dismantle the country’s enrichment program for any deal to go through. He has reportedly personally assured Israeli leaders that any deal must include the removal of the uranium stores, per Reuters.
The directive from Tehran throws into question Trump’s comments on the US getting close to a deal with Iran. The regime is reportedly working on a response to the latest US proposal that “narrowed the gaps to some extent,” according to Iran’s ISNA news agency.
Mediators see few signs of progress toward agreement between Washington and Tehran, the Wall Street Journal reported Tuesday. Iran has remained steadfast in its demands for war reparations, sanctions relief, and control over the Strait of Hormuz, while the regime continues to deny US goals for dismantling the country’s nuclear program.
“Meanwhile, the Strait of Hormuz remains shut, another 14 million barrels of oil has failed to make it to market, and the first two months on the Brent curve are trading over $100,” Mizuho director of energy futures Robert Yawger said Thursday morning.
Trump said Wednesday that he is prepared to direct military action against Iran if the US doesn’t receive “complete 100% good answers” from the Iranian regime, telling reporters, “It’s right on the borderline, believe me.” When asked how long he would be willing to wait for a response from Tehran, he added that a decision to strike “could go very quickly.”
Tehran said the same day that any US military action would be met with “crushing blows in places you do not expect” throughout the Middle East, per the state-owned Tasnim news agency, and that “the regional war that had been promised will this time extend beyond the region.”
Oil’s slide on Wednesday came after reports that a South Korean supertanker and two Chinese supertankers, all laden with crude, were successfully transiting the strait. However, the ships appeared to follow a route designated by Iran, according to ship-tracking data, and the Iranian government claimed South Korean and Chinese leaders had directly coordinated the passage of three ships with the IRGC.
Reports have documented Iran’s strengthening control over safe passage, which includes directing routes, charging fees, and negotiating directly with governments looking to see their ships exit the waterway safely. The Iranian ambassador to France said Wednesday that Iran and Oman, which are on opposite sides of the Strait of Hormuz, are working toward a joint management system for the waterway that would include a permanent tolling regime.
“Iran and Oman must mobilize all their resources both to provide security services and to manage navigation in the most appropriate manner,” Iranian ambassador to France Mohammad Amin-Nejad said to Bloomberg on Wednesday.
Yahoo/Finance
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