Oil prices began the week with a decline in international markets, extending losses recorded last week. Brent crude, the international benchmark, fell 1.6% to $96.7 a barrel, while U.S. West Texas Intermediate (WTI) crude traded at around $89 a barrel.
The drop comes as expectations grow for a diplomatic resolution to the conflict between the United States and Iran. U.S. President Donald Trump said it is “highly unlikely” he would authorize new military strikes against Tehran if negotiations over Iran’s nuclear program and the reopening of the Strait of Hormuz achieve substantial progress.
Brent crude had lost more than 13% of its value last week, and in some sessions the cumulative decline reached over 16%, reflecting market expectations of easing tensions in the Middle East.
The prospect of an agreement between Washington and Tehran is reducing the so-called geopolitical risk premium, which had been built into oil prices due to threats to energy supplies from the region. The Strait of Hormuz holds particular significance in this situation, as one of the most important corridors for international oil transport. Any disruption to shipping in this area could significantly affect global supply and trigger price increases.
