🛢️⬇️Brent crude loses over 11%

Massive price drop: Reaction to potentially imminent peace

Information about a possible agreement between the US and Iran triggered a sharp sell-off in the commodity markets. Brent crude fell significantly below 100 dollars per barrel, losing almost 12%. WTI crude oil, in turn, fell by almost 13% falling below 90 USD per barrel. A key impulse for the move was a report by the Axios news agency, which pointed to the creation of a one-page memorandum.

Headlines provided by Bloomberg, which are said to come from the highest American level, indicate that both sides are to lift the blockade of the Strait of Hormuz, and Iran is to commit to issuing a moratorium on further uranium enrichment. The United States itself points out that the entire nuclear deal is to be negotiated later. Therefore, if peace is indeed to be achieved in the next few dozen hours, it cannot be ruled out that this is not yet the end of volatility in the oil market.

The current downward movement fits into the situation of the 90s. This may mean that the worst is behind us, but volatility can still be quite significant. Source: Bloomberg Finance LP, XTB

Diplomatic progress: Signals from Washington and Tehran

Information terminal data and statements from politicians suggest that negotiations are in a very advanced phase:

• Donald Trump and "Project Freedom": The President announced on Truth Social progress in talks and a temporary pause in the operation to escort ships through the Strait of Hormuz to give a chance to finalize the agreement.
• End of "Epic Fury": Secretary of State Marco Rubio announced the end of military operation "Epic Fury," claiming that its objectives have been achieved.
• Gestures from Iran: The Iranian Navy (IRGC) declared that it will ensure safe passage through the Strait of Hormuz, which is key to unblocking global supplies. However, it is important that no information was given as to whether any fees would be charged.

Is this the final deal or just another hope?

Despite huge optimism, the situation is not yet completely clear. It is rather a "verification phase" than a final end to the conflict:

• 48 hours of truth: The US expects Iran's response to the new proposal within the next two days.
• Logistical problems: Even if the Strait of Hormuz is opened immediately, over 1,550 commercial vessels are still trapped in the region. The return of the oil market to full normality could take about half a year, and in the case of gas, probably even longer.
• The nuclear issue for later: New reports indicate that the full nuclear deal is to be negotiated at a later date, which means that the current "deal" focuses mainly on ending hostilities and unblocking trade routes.

Brent crude oil is losing rapidly and testing the 50-session average. If this line is broken, the path to the 80–85 range will remain open. Nevertheless, it may still be too early to announce the end of the war and the beginning of peace. Source: xStation5