Oil prices drop sharply as traders bet on a potential US-Iran agreement and Strait of Hormuz reopening, easing supply concerns.
West Texas Intermediate crude falls 2.49% to $91.98, extending weekly losses to 7.39% amid optimism over a US-Iran deal. Markets focus on Tehran’s response to a 14-point memorandum expected May 8, which could ease geopolitical tensions.
Prior to this week, WTI traded near $92.47, with analysts citing the Strait of Hormuz as a key supply bottleneck. Baker Hughes data showed a slight increase in rig counts, up one to 548, though still 5% lower year-over-year, signaling muted future output growth.
A resolution could reduce inflationary pressures, potentially prompting Federal Reserve easing. Conversely, conflict escalation risks pushing prices back above $100. April’s Nonfarm Payrolls surge to 115K from 62K adds to economic resilience concerns.