Brent Crude Slips Below $101 as US-Iran Peace Talks Gather Steam

Hopes for a US-Iran peace deal are growing, pushing oil prices to three-week lows as traders bet on the potential reopening of the Strait of Hormuz.

Oil prices extended their decline on Thursday, with Brent crude falling below $101 a barrel, as the United States and Iran edged closer to a temporary agreement to end their conflict. The international benchmark, Brent crude, fell 0.3 percent to $100.95, its lowest settlement since April 21, while West Texas Intermediate crude dropped 0.5 percent to $94.61 on hopes that a deal could see Iranian oil return to the market and reopen the vital Strait of Hormuz.

"We’ve had very good talks over the last 24 hours, and it’s very possible that we’ll make a deal,” President Donald Trump told reporters on Wednesday, fueling market optimism. Iran’s foreign ministry spokesman, Esmaeil Baghaei, confirmed the proposal was “under review” and that Tehran would convey its position to Pakistani mediators.

The prospect of a diplomatic breakthrough sent ripples across global markets. Oil prices had their biggest fall in two weeks on Wednesday, with Brent at one point tumbling 11 percent to around $98 a barrel before recovering. Conversely, global share prices leaped as investors priced in a potential easing of supply chain disruptions and energy costs that have contributed to a 31-cent rise in US gasoline prices over the past week.

At stake is a potential end to the war that began February 28 and the reopening of a strait that handles a fifth of the world's oil supply. According to sources familiar with the negotiations, the framework involves a one-page memorandum to formally end the conflict, triggering a 30-day window for detailed negotiations on lifting sanctions, unfreezing assets, and resolving the crisis in the Strait of Hormuz.

Deal Framework Emerges

Mediators, led by US envoy Steve Witkoff and President Trump's son-in-law Jared Kushner, are working on a short-term memorandum to halt the fighting, according to regional sources. The plan would reportedly unfold in three stages: a formal end to the war, a resolution to the Hormuz crisis, and the launch of a 30-day negotiation period for a broader agreement.

The diplomatic push gained momentum after Trump announced a pause on "Project Freedom," a naval mission to escort ships through the strait, citing progress in the talks. However, Iranian officials have expressed skepticism. Parliament speaker Mohammad Baqer Qalibaf mocked the reports on social media, suggesting they were US spin, while lawmaker Ebrahim Rezaei described the proposal as "more of an American wish-list than a reality."

Nuclear Program Remains Key Hurdle

Despite the optimism, significant hurdles remain, particularly concerning Iran's nuclear program. The current proposal reportedly leaves key US demands unresolved, including the fate of Iran's stockpile of more than 400 kg of highly enriched uranium and the duration of a proposed moratorium on uranium enrichment.

A previous US proposal for a 20-year enrichment moratorium was rejected, and the current plan is said to include a period longer than 10 years. The idea of shipping the enriched uranium out of the country, a key US demand, was a factor in the breakdown of earlier talks and remains a major sticking point. While the current memorandum may not require immediate concessions on these issues, they will be central to the 30-day negotiation period that would follow.

This article is for informational purposes only and does not constitute investment advice.