Success Nwogu Prices of crude oil decreased by nearly five per cent yesterday following the announcement by the United States President, Donald Trump that Iran was “seriously talking” with Washington. The comment signaled a deescalation of tensions with Iran which is a prominent member of the Organisation of Petroleum Exporting Countries (OPEC). Another contributor to the fall of the price was identified as a stronger dollar.
The price of Brent crude futures fell by $3.31, or 4.8 per cent, to trade at $66.01 per barrel while the price of US West Texas Intermediate crude declined byl $3.16, or 4.9 per cent, to trade at $62.5 per barrel. According to CN BC, Brent and WTI price dimmed after posting their biggest monthly increase since 2022 in January, as risks of a military strike on Iran receded after Trump’s weekend comments.
Brent gained 16 per cent in January, while WTI rose by 13 per cent. Recall that on January 28, Oil prices rose to their highest since late September as Brent crude futures rose by 92 cents, or around 1.4 per cent, to trade at $68.49 per barrel while the price of US West Texas Intermediate crude increased by $1.04, or around 1.7 per cent, to trade at $63.43.
Trump had warned Iran that a “massive Armada” was heading in its direction and that time was running out to make a deal on Iran’s nuclear programme. Responding to the current crude oil prices’ fall, UBS analyst Giovanni Staunovo, stated that the lack of a further escalation of tensions in the Middle East, as well as falling supply disruptions in the US and Kazakhstan, weighed on oil prices.
CNBC recalled that on Saturday Trump told reporters Iran was “seriously talking”, hours after Tehran’s top security official Ali Larijani said arrangements for negotiations were underway. An analyst at Phillip Nova, Priyanka Sachdeva, said: “Trump had repeatedly threatened Iran with intervention if it did not agree to a nuclear deal or continued killing protesters.
The persistent threats have underpinned oil prices throughout January. “The recent pullback has also been reinforced by renewed strength in the U.S. dollar, which typically makes dollar-denominated oil more expensive for nonU.S. buyers, further weighing on prices.”
PVM analyst Tamas Varga said: “The weakness in oil this morning is the combination of the disappearance of the geopolitical risk premium as the US and Iran show tentative willingness to negotiate, and the uptick in the dollar due to the appointment of the next Federal Reserve chairman.”
