Oil prices fell sharply on Thursday, with Brent crude dropping below $100 a barrel for the first time in two weeks, as investors reacted to growing optimism over a possible U.S.-Iran peace agreement and a gradual reopening of the Strait of Hormuz.
Brent crude futures declined by $2.50, or 2.5%, to $98.77 a barrel by 1107 GMT, while U.S. West Texas Intermediate crude fell $2.47, or 2.6%, to $92.61. The losses followed a more than 7% slump in both benchmarks on Wednesday amid easing fears of supply disruptions in the Middle East.
Markets swung sharply during Thursday’s trading session as reports emerged suggesting progress in diplomatic negotiations. Saudi Arabia’s Al Arabiya channel reported that understandings had been reached to ease the U.S. blockade in return for a phased reopening of the Strait of Hormuz, a key global oil shipping route.
Another report by Israel’s Channel 12 said Iran had agreed to transfer its stockpile of 60% enriched uranium to a third country, although Reuters could not independently verify either claim.
Analysts said oil prices have remained highly sensitive to developments surrounding the Middle East conflict, with traders reacting strongly to every headline tied to diplomacy or potential military escalation.
Phillip Nova senior market analyst Priyanka Sachdeva said a formal agreement could remove the geopolitical risk premium currently supporting crude prices, potentially triggering a deeper fall in the market.
However, she warned that any renewed attacks on oil infrastructure or further escalation in the region could quickly send prices sharply higher again.
Iran said on Wednesday it was reviewing a U.S. peace proposal aimed at ending the conflict, though key issues remain unresolved, including Washington’s demand that Tehran suspend its nuclear programme and fully reopen the Strait of Hormuz.
The developments come ahead of an expected meeting next week between U.S. President Donald Trump and Chinese President Xi Jinping, after U.S. Treasury Secretary Scott Bessent urged Beijing to help persuade Iran to restore unrestricted shipping access through the strategic waterway.