Oil prices fell by around 3 percent on Tuesday afternoon after U.S. and Iranian officials announced that they were making moves towards a new set of negotiations.
Specifically, Iran’s foreign minister Mohammad Javad Zarif went on to say that his country would be willing to negotiate with the U.S if they would be willing to ease up on economic sanctions.
Speaking to NBC on late Monday, the foreign minister went on to say that the door is “wide open” for diplomacy with President Trump if he would cut back on the number of tensions imposed on the country since 2017.
“Once those sanctions are lifted, then … the room for negotiation is wide open…It is the United States that left the bargaining table. And they’re always welcome to return…Had we been interested in developing nuclear weapons, we would have been able to do it long time ago,” Zarif said. “I do not believe that President Trump wants war. But I believe that people are around him who wouldn’t mind.”
In response to this development, oil prices fell by 3 percent. West Texas Intermediate crude futures fell by 4 percent to $57.19 per barrel, while international benchmark Brent Crude fell by 3.8 percent to $63.97 per barrel. Additionally, major oil stocks also took a tumble on what is seen as good news for global economic stability.
Tensions between Iran and the U.S. have pushed oil to higher prices over the past few weeks following a series of oil tanker attacks. After the U.S. blamed the middle eastern nation for these incidents, prices for oil shot up as a significant portion of the world’s oil supply passes through the Strait of Hormuz at one point or another.
Before this series of incidents, oil prices had been steadily tumbling as America’s growing domestic production continues to increase. Prices had been falling so significantly that OPEC was originally considering further supply cuts until the oil attacks sent prices skyrocketing. The recent meeting between the council of nations has led to a continuation of their current policy but have vowed to draw the line at $50 per barrel.
Another factor that pushed down oil prices today had to do with Hurricane Barry. U.S. oil companies by late Monday had begun restoring some of the 74 percent of production that had been suspended at platforms in the Gulf of Mexico due to the tropical storm. While southern states like Louisiana are expected to be hit with 10 inches of rain as well as lengthy shutdowns for a number of refineries, their ocean-based counterparts have now dealt with the brunt of the storm and are expected to come back online soon.
Traders will be keeping a close eye out for inventory data published by the American Petroleum Institute sometime on Tuesday evening, as well as by the U.S. Department of Energy on Wednesday. Regardless, with tensions in the East dying down while America’s strong production continues to grow, oil prices for the long term as expected to slowly return to below $60 over the next few months, barring other news developments, of course.
