Oil falls below $90 due to possible US-Iran deal
Oil fell almost 5% after reports about a possible agreement between the United States and Iran to reactivate transit in Hormuz and stock indices rise
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According to Reuters, Iranian state television said it had access to a copy of a draft memorandum of understanding between Washington and Tehran. The news was enough to modify the behavior of the markets, especially in the face of the fear of a prolonged interruption of the global supply of crude oil due to the conflict in the region.
During the day, West Texas Intermediate (WTI) oil futures fell close to 5%. The contract fell 4.6% to $89.55 per barrel by 9:26 am ET. Meanwhile, Brent crude, an international benchmark, fell 3.73% to $95.87 dollars per barrel.
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Reports also indicate that US military forces would leave areas close to Iran and that the naval blockade implemented during the crisis would be lifted. So far, neither the White House nor the US Department of Defense have officially confirmed the contents of the alleged draft.
Wall Street also reacts positively to the deal
The news about the possibility of a US-Iran deal also boosted Wall Street. The Dow Jones industrial average advanced nearly 300 points and reached new highs during the day, as investors reacted to the fall in oil prices and expectations of a reduction in tensions in the Middle East.
For its part, the Nasdaq Composite managed to rise, supported by the technology sector and the rise of companies linked to artificial intelligence and semiconductors.
The tech sector continued to be one of Wall Street's main drivers. Micron registered a slight rise after soaring 19% in the previous session, a move that allowed the company to surpass $1 trillion in market value for the first time. The rebound followed an upbeat report from UBS, which said long-term deals to supply memory for artificial intelligence projects could double the company's value.
South Korea's SK Hynix, Micron's direct competitor, also reached a capitalization of more than $1 trillion.
Are tensions in the Middle East ending?
The relationship between the two countries went through days of maximum tension this week. U.S. forces carried out strikes in southern Iran, an action the Pentagon described as a defensive measure. The Iranian government subsequently warned that it would respond militarily to those operations.
Despite the initial optimism of the markets, specialists in the energy sector consider an immediate recovery of the oil flow unlikely. Logistical and security impacts in the region could keep export capacity limited for several months.
“It will take at least four months for oil flows to reach 80% of normal levels, even if the US-Iran conflict ends immediately,” said Sultan Ahmed al-Jaber, director of the Abu Dhabi National Oil Company. "The complete normalization of flows will not occur until the first or second quarter of 2027."
Although a possible deal could ease pressure on oil prices in the near term, the market remains on the lookout for any political or military moves in the Middle East, a key region for global energy supply.