Crude Oil Prices Sink Ahead of Expected US-Iran Deal
Top crude oil benchmarks retreated on June 13 on Hyperliquid as investors awaited a potential U.S.-Iran deal, which could be signed as early as Sunday.
Crude Oil Price Sinks Amid Hopes of a US-Iran Deal
Brent, the global benchmark, dropped to $84, its lowest level since April 17, with its open interest rising to $243 million and its volume crossing the $100 million mark.
The West Texas Intermediate (WTI) dropped for three consecutive days, reaching a low of $81, down sharply from the year-to-date high of $119. As a result, AAA data shows that the average gasoline price has dropped to $4.06 from $4.51 on the same day last month.
Crude oil prices have pulled back as investors react to the potential deal between the US and Iran, which may be signed in Zurich on Sunday. According to the NYT, Pakistan, which has emerged as a key negotiator, said that the deal may be signed as soon as Sunday.
The full details of the deal have not been made public yet, but they will include the reopening of the Strait of Hormuz. This is a key priority of President Donald Trump, who is contending with low approval ratings amid higher inflation. Data released this week showed that the US consumer inflation jumped 4.2%, while the producer price index soared 6.4%.
Trump is also aware of the dire situation in the oil market, where US inventories have dropped sharply in the past few months. The Strategic Petroleum Reserves have fallen to the lowest level since the 1980s. Top oil executives have also warned him that prices would remain high the longer the war continues.
Potential Risks For a Deal Remain
Still, despite the ongoing hopes of a deal, there are some potential risks. One of them is that the deal may not be signed on Sunday as market participants expect. In a statement to IRIB, an Iranian state broadcaster, Esmail Baghaei, a foreign ministry spokesman, lowered expectations of a deal being signed this weekend.
There is also the risk of Israel and the happenings in Lebanon. Iran has insisted that any deal will need to include Lebanon, where Israel has continued to bomb.
In a social media statement, Israeli Defense Minister Israel Katz said that Trump was acting on US interests. He warned that Israel may decide to go it alone to ensure that Iran does not pursue a nuclear weapon.
If Israel decides to attack Iran, chances are that the US will also be involved, which will lead to a return to war.
With the official markets being closed during the weekend, traders have turned to Hyperliquid, a perpetual futures decentralized network. WTI's open interest jumped to over $215 million, while Brent's rose to over $243 million.
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