Brent crude plunged more than $6 a barrel on Tuesday morning, falling from $107.24 to $100.80 before recovering around $104 shortly after 10 a.m. Eastern Time as traders reacted to a succession of conflicting reports on peace negotiations between the United States and Iran.
The sell-off follows Monday’s 7.6% drop, which left Brent at $104.77. Prices initially rebounded overnight after reports of US strikes on the Iranian island of Qeshm, near the Strait of Hormuz, before reversing sharply on Tuesday morning.
The first sharp decline began moments before a headline attributed by Bloomberg announced that Iran’s supreme leader had authorized negotiations on previously non-negotiable issues.
But it was a stronger claim than Iranian President Masoud Pezeshkian’s statement that the supreme leader had only granted the government additional negotiating power. Pezeshkian did not specify what issues might be discussed.
Questions then emerged about whether Bloomberg’s headline accurately reflected the Iranian statement.
Brent suffered another sharp decline around 8:20 a.m., just as Al Jazeera reported that Washington had approved a draft deal presented through Qatari mediators.
Other reports revealed that Washington and Tehran made concessions regarding Iran’s nuclear program and froze assets, citing Al Araby Al Jadeed. The Al Araby report describes a plan to exchange Iranian nuclear concessions for the release of frozen funds.
But a senior Iranian official rejected the claim that there had been a breakthrough in terms of concessions and made clear that a deal was indeed still far away. Tehran’s public position has been and still is that its conditions must be met before Hormuz can reopen, and that nuclear negotiations can only begin once these conditions are met.
In other words, nothing substantial has officially changed.
Qatar confirmed that both sides were reviewing the proposals and that no agreement has been announced.
Competing reports help explain the uncertainty surrounding Tuesday’s trading, although they do not establish the cause of the sharp decline. Dynamic trading and automated orders may have amplified the movements.
By mid-morning, Brent had recovered almost $3 from its session low. Reported diplomatic advances remain unverified and the Strait of Hormuz remains restricted.
By Julianne Geiger for Oilprice.com
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