WTI slips below $91.00 amid rising US-Iran peace hopes

• WTI falls as supply fears ease on growing optimism surrounding a potential US-Iran agreement.
• The US and Iran are reportedly close to signing an agreement involving a 60-day ceasefire extension.
• Reopening the Strait of Hormuz would further lower oil prices and relieve Asian economies.

West Texas Intermediate (WTI) oil price continues its losing streak for the fourth successive day, declining by nearly 5.5% and trading around $90.80 per barrel during the Asian hours on Monday. Crude oil prices drop on easing supply fears due to rising optimism over a potential US-Iran agreement.

Axios reported a US official saying that the United States (US) and Iran are close to signing an agreement that involves a 60-day ceasefire extension. Under this proposed deal, the Strait of Hormuz would be reopened, and Iran would agree to clear mines it deployed in the waterway while allowing ships to pass freely. In exchange for these actions, the United States would lift its current blockade on Iranian ports.

Reopening the Strait of Hormuz would significantly relieve major Asian economies and sharply lower oil prices, as the waterway handles about one-fifth of global oil and liquefied natural gas shipments. Previously, the conflict and a dual blockade severely disrupted energy markets, forcing Middle Eastern producers to halt millions of barrels of daily crude output.

However, a Reuters report, citing Iran’s Tasnim news agency, states that the US government is still obstructing certain clauses of the agreement to end the conflict, specifically regarding the release of blocked Iranian assets. Further tempering immediate expectations, US Secretary of State Marco Rubio informed the New York Times that while an agreement with Iran has garnered regional support, a comprehensive nuclear deal could not be achieved quickly or carelessly.