Oil prices fell and markets inched higher before the opening bell Friday, adding to records a day earlier on optimism over a tentative deal to extend the ceasefire in the war with Iran.
Oil prices fell Friday with Brent crude, the international standard, slipping $1.26 to $91.44 a barrel. It was trading around $70 per barrel in late February before the war began. Benchmark U.S. crude fell $1.03 to $87.87 per barrel.
Investors are closely watching for a reopening of the Strait of Hormuz. The U.S. official said the tentative accord makes it clear that Iran wouldn’t be able to impose tolls on ships transiting the strait, while the U.S. would gradually lift its sea blockade on Iranian ports.
“The oil market continues to edge lower amid growing optimism that the U.S. and Iran are moving toward a deal,” ING commodities strategists Warren Patterson and Ewa Manthey wrote Friday. “A reopening of the strait would offer some immediate relief to the oil market with tankers leaving the Persian Gulf. However, the recovery is still uncertain.”
Shipowners may be reluctant to send vessels into the Persian Gulf, at least initially, over fears that the ceasefire could fail, they wrote. Also a recovery in oil and gas production would likely also be gradual rather than immediate.
On Thursday, negotiators from the U.S. and Iran reached a tentative deal on extending their ceasefire by 60 days and holding a new round of talks on Iran’s nuclear program, a U.S. official said. Iran had not yet publicly confirmed the deal and the tentative agreement was still pending U.S. President Donald Trump’s sign off.
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