- Brent had dropped by 40% from its wartime peaks.
- Trump told reporters that Qatar talks were progressing well.
- Traders are eagerly awaiting the US nonfarm payrolls report.
Oil prices fell further on Thursday as easing geopolitical tensions improved the outlook for global supply. Market participants are keeping a close eye on talks in Qatar, which are progressing well despite the hostilities witnessed over the weekend. Meanwhile, the US is set to release its pivotal monthly employment report later today.
Brent Performance (Source: ICE)
The Iran war, which started in late February, sent oil prices up by nearly 30%. However, since talks began and tensions between the two nations began to ease, prices have been in a bearish trend, erasing all wartime gains. By Thursday, Brent had dropped by 40% from its wartime peaks.
The decline intensified after the US and Iran signed a peace deal and extended their ceasefire by 60 days. The deal allowed for the reopening of the Strait of Hormuz, which has allowed traffic to increase gradually. Ship owners are becoming more confident that they can pass through without much friction. As a result, the outlook for oil supply has improved.
With fewer supply disruptions, the market will loosen, and prices will likely keep falling. The deal also led to an end to the US blockade of Iranian ports. The US also removed its sanctions on Iranian oil, further improving the supply outlook. As talks continue, experts are hoping for a longer-lasting deal that will end the war and ensure the conditions agreed to are kept.
However, the path to this future is still rocky. Over the weekend, hostilities between the two countries rose again as they exchanged fire. After this, the US said it would not negotiate with Iran in Qatar. This caused some panic in the market, but it was not enough to change the current trend.
Moreover, calm returned after it became clear that talks would continue indirectly. US negotiators are talking through mediators in Qatar. Trump later told reporters that these talks were progressing well.
“The denuclearization of Iran is moving along well,” Trump said. “They’ve had very good meetings, and we’ll see.”
Elsewhere, traders are eagerly awaiting the US nonfarm payrolls report. Forecasts show that the economy added 114,000 jobs in June, slightly below the previous month’s 172,000. Meanwhile, unemployment could hold at 4.3%. The report will shape the outlook for US monetary policy.
