BREAKING: Brent Crude Falls Below $80 Raises Hope Of Reduction In Pump Price In Nigeria
Oil prices fell more than $1 per barrel on Thursday after the U.S. and Iran signed an interim agreement that would end the Iran war, reopen the Strait of Hormuz and waive U.S. sanctions on Tehran’s oil, boosting the oil supply outlook.
Brent crude futures were down $1.64, or 2.06%, at $77.91 at $77.91 a barrel as of 0427 GMT, and US west Texas intermediate fell $1.80 or 2.34% to $74.99 a barrel.
The steady in global oil prices raised hopes that pump prices in Nigeria will plunge back to where they were before the US and Israel launched attacks on Iran earlier in the year
After several days of declines, Brent briefly spiked above $81 a barrel on Wednesday after Trump warned that the US could “go right back to dropping bombs” on Iran if it doesn’t “behave”.
Shrugging off losses on Wall Street overnight, Asian stock markets rallied on renewed optimism for an end to nearly four months of disruption to global energy supply chains.
Japan’s benchmark Nikkei 225 and South Korea’s Kospi both hit all-time highs, gaining more than 2 percent and 1.7 percent, respectively.
Taiwan’s Taiex rose as much as 1.3 percent.
Hong Kong’s Hang Seng Index bucked the trend, dropping 1.7 percent.
US stock futures, which are traded outside of regular market hours and often foreshadow the next day’s performance, climbed, with those tied to the benchmark S&P 500 and the tech-heavy Nasdaq Composite climbing about 0.8 percent and 1.3 percent, respectively.
“Putting aside the contents of the MoU, markets are likely to be welcoming the fact that both the US and Iran signed it sooner than initially expected,” Norihiro Yamaguchi, lead economist for Japan at Oxford Economics, told Al Jazeera.
“The timing is also supportive, as the major central bank policy meetings have now passed, reducing a key source of uncertainty,” Yamaguchi said.
“For Asian markets, the renewed strength in US semiconductor stocks should provide an additional boost, given the region’s heavy exposure to tech shares.”
Pakistani Prime Minister Shehbaz Sharif, who mediated the negotiations between Washington and Tehran, said on Wednesday that the US-Iran memorandum of understanding (MoU) had entered into force with “immediate effect”.
Sharif said Iran would “instantly reopen” the Strait of Hormuz and the US would “immediately” lift its naval blockade of Iranian ports, though it was not immediately clear if the announcement had any effect on boosting maritime traffic in the critical waterway.
Shipping in the strait has been reduced to a fraction of peacetime levels due to the threat of Iranian missiles, drones and mines, as well as the US blockade.
The blockage has resulted in an estimated daily shortfall of 14 million barrels in the global oil market, according to the International Energy Agency (IEA).
Fabien Yip, a market analyst at IG in Sydney, said that while markets have responded to the MoU with optimism, the relief is “largely priced in” as practical issues such as the backlog of vessels in the Gulf and mine clearing operations must still be resolved.
“There is a notable divergence between sentiment and physical supply – production ramp-up and logistics normalisation will take time,” Yip told Al Jazeera.
While more than 500 vessels are estimated to be waiting to exit the Gulf through the strait, shipping companies have expressed concern about the lack of clarity on how to ensure the safety of their vessels and crews in the channel.
In a statement earlier this week, the Baltic and International Maritime Council (BIMCO), one of the world’s largest associations for shipowners, said the US and Iran had yet to provide information about “key aspects such as timings and safe routes”.
“Due to lack of details and a history of overly optimistic reassurances, we believe the security situation for the shipping industry remains volatile, and we still consider it very risky for ships to commence transits at this point,” Jakob Larsen, chief safety and security officer at BIMCO, said in a statement on Monday, responding to the initial announcement of the MoU.
“We advise shipowners to continue doing thorough risk assessments and appeal to all parties to put the safety of seafarers first.”
