Oil prices sank Monday, hitting their lowest levels in more than three months, after the United States and Iran said they had reached an agreement that would end a US blockade of Iranian ports and reopen the vital Strait of Hormuz.
Brent crude, the global oil benchmark, fell 5% to $82.91 a barrel shortly after 5 a.m. ET, having settled Friday at its lowest level since March 5, the first week of US-Israeli airstrikes against Iran. US crude dropped 5.5% to $80.21, also its lowest since early March. Both have fallen around $10 a barrel over the past week.
However, crude prices remain around $10 a barrel higher than they were before the United States and Israel launched attacks on Iran in late February – and it could take many months for them to return to pre-war levels.
“Sentiment has clearly improved… but sentiment is not the same as supply,” Rystad Energy’s chief economist Claudio Galimberti wrote in a note Monday.
Markets have cheered apparent progress, but the oil market still has significant work ahead to return the flow of crude to normal. The Strait of Hormuz needs to be de-mined, ships need to be able to freely flow in and out of the strait, Middle East production needs to come back online, emergency petroleum reserves need to be refilled, and damaged energy facilities need to be repaired.
Credit: cnn.com
