Oil prices fluctuated on Wednesday as investors cautiously await a forthcoming deal to end the war between the United States and Iran.
The terms of the preliminary agreement have not been released by either country, but traders will be eyeing whether the negotiations will ultimately lead to the Strait of Hormuz being reopened to commercial traffic, as President Donald Trump has claimed. The agreement is expected to be signed on Friday.
The market showed restrained optimism, with the price of Brent Crude, the global benchmark for oil, ticking up over one percent. The price per barrel crossed above $80 for several hours before coming back down to $79.
West Texas Intermediate Crude, the U.S. benchmark, also increased by more than one percent to nearly $77 per barrel, but it has since sagged to around $76.60.
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Before the U.S. launched strikes on Iran on February 28, roughly 20 percent of crude oil passed through the all-important chokepoint that connects the Persian Gulf to the open ocean. In late April, Brent Crude reached a wartime high of around $120 per barrel.
Oil prices have decreased since the U.S. and Iran announced the framework of a deal, which will involve a 60-day ceasefire and the reopening of the Strait of Hormuz. Prices have not yet stabilized to pre-war levels, which saw oil selling at the $65 to $75 per barrel range.
While speaking to reporters at the G7 Summit in France on Wednesday, Trump celebrated the progress that has been made with Iran and cited rising stock prices as proof that negotiations are on the right track.
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“We have a very hot stock market, and we have a very starting to be a very low oil price,” he said during a bilateral meeting at the G7 with Egypt. “And I think oil prices might get lower than where they were before the war.”
Trump also said he expects the Strait of Hormuz to be opened “in full” within two days under the deal.
The terms of the agreement are still murky, and Trump has called certain details of a leaked memorandum of understanding between the U.S. and Iran “false.”
Specifically, Trump said the U.S. will not contribute to a $300 billion fund that would go toward developing Iran’s economy.
“No, we’re not investing. We’re not putting up $0.10. And, people can decide to do that, but that’s up to them. I mean, do you want me to say nobody’s ever allowed to invest in in a country?” Trump told Fox News’ Peter Doocy.
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