Oil prices fall more than 3% on reports of possible US-Iran talks

Global oil prices declined by more than 3% following reports of possible negotiations between the United States and Iran raising hopes of reduced geopolitical tensions and easing concerns over energy supplies.

Global oil prices declined by more than 3% following reports of possible negotiations between the United States and Iran raising hopes of reduced geopolitical tensions and easing concerns over energy supplies.

Brent crude dropped to around $110 per barrel while US crude was trading at approximately $101 per barrel. Meanwhile the price of the UAE’s Murban crude stood at about $115 per barrel.

The decline came amid speculation that diplomatic engagement between Washington and Tehran could help ease tensions affecting the international oil market. Developments surrounding the two countries have remained a major factor influencing crude prices particularly because of concerns over supply disruptions in the Middle East.

However the energy market continues to face supply pressures. Abu Dhabi’s state-owned oil company has warned that the closure of the Strait of Hormuz has reduced global oil inventories by nearly one billion barrels.

The company also highlighted growing concerns over diesel supplies reporting that inventories had fallen to their lowest level in 35 years.

The Strait of Hormuz is a strategically important shipping route for international energy trade. Any prolonged disruption to traffic through the waterway can affect the movement of crude oil and petroleum products putting additional pressure on global markets.

Meanwhile consumers in Pakistan are awaiting a possible revision in domestic petroleum prices. The government is expected to announce changes to fuel rates on Monday although the final decision was not included in the report.

Federal Minister for Petroleum Ali Pervaiz Malik has also indicated that a proposed new pricing formula could reduce the price of petrol by up to Rs15 per litre.

The potential reduction would offer some relief to Pakistani consumers if approved and reflected in the upcoming price announcement.

Market participants will continue to monitor developments in US-Iran relations the situation around the Strait of Hormuz and international supply levels as these factors could influence oil prices in the coming days.