Oil prices edge lower as hopes rise for possible US-Iran agreement

Global oil prices slipped modestly on Thursday as optimism over a possible agreement between the United States and Iran eased concerns about potential supply disruptions in the Middle East

LONDON: Global oil prices slipped modestly on Thursday as optimism over a possible agreement between the United States and Iran eased concerns about potential supply disruptions in the Middle East, prompting investors to scale back risk premiums in the energy market.

According to Reuters, market sentiment improved after reports of continued diplomatic engagement involving Iran and Oman, raising expectations that negotiations between Washington and Tehran could lead to a breakthrough. Traders believe any progress towards an agreement could help reduce regional tensions and improve the outlook for global oil supplies.

Brent crude futures declined by 37 cents, or 0.5 per cent, to $79.08 per barrel, while US West Texas Intermediate (WTI) crude fell 53 cents, or 0.7 per cent, to $74.69 per barrel during early trading.

The latest decline followed a modest gain in Brent crude during the previous trading session, reflecting continued uncertainty in global energy markets as investors closely monitor diplomatic developments and geopolitical risks.

Market analysts said that hopes of a diplomatic settlement between the United States and Iran have encouraged traders to anticipate a more stable supply environment. A successful agreement could help resolve months of heightened tensions and reduce the risk of disruptions to oil exports from the Gulf region.

Investors are also watching developments around the Strait of Hormuz, one of the world’s busiest oil shipping routes. Any easing of regional tensions is expected to improve the security of maritime trade and ensure the uninterrupted movement of crude oil, a factor that could put additional downward pressure on prices.