The news of a possible MoU between the United States and Iran has had a major impact on the international energy market. Crude oil prices have fallen significantly in the global market as U.S. sanctions on Iranian oil are likely to be eased.
On Wednesday (June 17th), the price of Brent crude fell below $80 per barrel in the international market. According to market analysts, oil prices have fallen by almost a third compared to the recent highest position, which is seen as a relief message for investors and importing countries in the energy sector.
Why is the price of oil going down?
Oil prices in the global market have risen steadily since the start of the U.S. and Israel’s military campaign to Iran on February 28. The situation became more complicated when Iran restricted the movement of one of the world’s most important energy routes to the Strait of Hormuz. This led to uncertainty in the supply of oil and increased the pressure to increase the price increase in the market.
However, the news of a possible agreement between the two countries has raised hopes of re-export of normal oil from the Middle East. This has led to a drop in the market price.
Analysts’ opinions
Luka Bellobrazic, an economist at Westpac, said Iran’s full-fledged oil exports could provide up to 2 percent of global energy needs. However, he warned that the lifting or easing of the ban was not yet certain and would depend on a long-term peace and political settlement.
According to him, the market is currently assessing the potential positive situation, but there are still many diplomatic and political obstacles in the way of implementation.
What’s going to happen in front?
A possible deal between the United States and Iran is scheduled to sign on Friday. Although the details of the deal have not yet been released, the energy market partners are closely monitoring the situation.
If the agreement is implemented and Iranian oil re-enters the global market, it is expected to put more pressure on oil prices in the coming weeks.