Oil prices continued to extend their decline in Thursday's trading session, plunging more than 2% as expectations of a peace agreement to gradually reopen the Strait of Hormuz increased.
As of 3:47 PM Vietnam time, Brent oil price decreased by 1.85 USD, equivalent to 1.8%, to 99.49 USD/barrel. US WTI crude oil decreased by 1.84 USD, equivalent to 1.89%, to 93.26 USD/barrel.
Both benchmark oils fell more than 7% on Wednesday, to a two-week low as the market became more optimistic about the possibility of an early end to the war in the Middle East.
Saudi Arabia's Al Arabiya news agency reported on Thursday that the parties have reached agreements to ease US blockades of Iranian ports in exchange for reopening the Strait of Hormuz step by step. Reuters said it could not verify this information immediately.
Iran previously said it was considering a peace proposal from the US. According to sources, this proposal would officially end the war but has not yet resolved key demands from Washington, including Tehran's suspension of its nuclear program and reopening the Strait of Hormuz.
From a broader perspective, the oil market has been stuck between diplomacy and supply disruptions for more than two months, as investor sentiment is almost daily dominated by news flows," said Priyanka Sachdeva - Senior Market Analyst at Phillip Nova.
According to Ms. Sachdeva, if an official agreement is signed, oil prices could plummet as the "geopolitical risk premium" quickly disappears from the market. However, any new signs of attacks on oil infrastructure or escalating tensions in the Middle East could cause oil prices to rebound sharply.
Earlier this week, US Treasury Secretary Scott Bessent called on China to strengthen diplomatic efforts to persuade Iran to reopen the Strait of Hormuz for international transportation. He also said that President Donald Trump and Chinese President Xi Jinping will discuss this issue in a meeting next week.
Peace talks are likely to continue at least until the US-China summit next week, but the prospects afterwards are still very uncertain," said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment.
