Oil prices dropped sharply in early Asian trading on Monday after United States President Donald Trump announced that Washington would pursue fresh negotiations with Iran to end the Middle East war and reopen the Strait of Hormuz.
The development sent the international oil market lower as investors reacted to the possibility of a diplomatic solution to the conflict and the reopening of the major shipping route.
At about 2250 GMT on Sunday, Brent crude, the international benchmark, for September delivery dropped 4.69 percent to $83.81 per barrel.
The United States benchmark, West Texas Intermediate, also fell by 4.67 per cent to $80.72 per barrel.
The latest movement in oil prices followed Trump’s announcement on Sunday that fresh talks with Iran would begin on Monday, Naija News reports.
The President said he had delayed major military strikes against Iran in order to pursue a diplomatic solution to the conflict.
“Now what we’re doing is we’re talking to them in the form of a negotiation. It begins tomorrow afternoon,” Trump said.
He, however, did not disclose where the negotiations would take place or identify the participants.
The war, which began in late February after the United States and Israel launched attacks on Iran, has caused significant volatility in the global oil market.
The conflict effectively disrupted the Strait of Hormuz, one of the world’s most important routes for the transportation of crude oil and natural gas.
The waterway is crucial to global energy supplies, and any prolonged disruption has raised concerns about possible shortages and higher fuel prices worldwide.
Meanwhile, Iran said on Sunday that it was close to reaching an agreement with Oman on a new route through the Strait of Hormuz.
The announcement came hours after the United States suspended major planned strikes against Iran as diplomatic efforts to resolve the conflict gathered momentum.
The possible reopening of the strategic waterway or the creation of an alternative route could ease pressure on global energy supplies and further influence oil prices in the coming days.
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