Oil Prices Dropped on Uncertain US-Iran Peace Deal Prospects

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London: Oil prices dropped significantly on Monday as investors reviewed mixed signals about a possible peace deal between the United States and Iran, sparking hopes that interruptions to global oil supplies would be resolved.

Brent crude slipped below $100 a barrel, and US West Texas Intermediate (WTI) also dropped, extending previous losses. Markets reacted to statements indicating progress in negotiations between Washington and Tehran, which might eventually lead to the reopening of the vital Strait of Hormuz, a key route for global oil supplies.

However, uncertainty remains high since officials from both sides gave contradictory signals about the status and timing of any agreement. Analysts warned that even if a settlement is reached, restoring normal oil flows and shipping operations might take months, minimising the immediate impact on global supply.

The drop in oil prices lifted confidence in global equity markets, with investors expecting that lower energy costs will alleviate inflationary pressures and assist GDP. Asian markets mainly increased, but crude-sensitive sectors like airlines and transportation companies increased.