The drop in the price of Brent crude came as shipping giant Maersk warned that high energy costs would persist even if a peace agreement were reached soon.
Oil prices dropped again on May 7, slipping more than 4 percent to take the Brent crude benchmark below $100 a barrel on renewed hopes that a peace deal between the United States and Iran is on the horizon.
Brent crude futures fell $4.31, or to $96.96 a barrel, during trading on May 7, during an unsettled session that saw fluctuations of up to 4.6 percent from Wednesday’s close.
The continued fall comes after the price dropped to two-week lows on May 6 amid speculation that Washington and Tehran were nearing an initial peace deal.
The cost of Brent crude fell 11 percent to under $98 a barrel in Wednesday trading as Trump said he was pausing efforts to guide stranded ships out of the strait to finalize a deal with Iran on ending the conflict; however, prices remain well above the pre-war level of around $70 a barrel.
The price drop comes after it hit a four-year high of more than $126 a barrel on April 30.
“A confirmed deal probably takes Brent back into the $80-90s quickly. A breakdown in talks or a Trump pivot back to strikes lands us immediately north of $120 a barrel,” SEB Research analyst Ole Hvalbye said in a note.
President Donald Trump, at a May 6 White House event, told reporters that administration officials are engaged with Iranian negotiators who want to reach an agreement and that any final deal must meet U.S. requirements.
“We’re dealing with people that want to make a deal very much, and we’ll see whether or not they can make a deal that’s satisfactory to us,” he said, saying that they “want to negotiate.”
During a phone conversation with French President Emmanuel Macron, Iranian President Masoud Pezeshkian said Tehran is ready to engage in diplomacy with the United States, according to Iranian state-run PressTV on May 6.
“[The country] is ready to seriously pursue diplomatic paths to end the war, while emphasizing the realization of the rights of the Iranian nation,” Pezeshkian said, according to the report.
By Guy Birchall
