Oil Drops on Hopes for Progress in US-Iran Talks; Brent Falls Below $100

International oil prices fell sharply on hopes for progress in talks between the US and Iran.

Bloomberg reported on May 24 that Brent crude, the global benchmark, fell as low as $99.16 a barrel intraday. That was more than 4% below the prior week. West Texas Intermediate also traded near $92 a barrel.

Oil prices had already fallen more than 5% last week. The market has attributed the latest decline to easing concerns over disruptions to Middle East crude supplies as prospects for a US-Iran agreement improved.

President Donald Trump wrote on social media on May 24 that negotiations were not yet fully complete, but that he was in no rush. Reports said the US government still plans to maintain the closure of the Strait of Hormuz until a final agreement is reached.

The US and Iran are continuing talks over Tehran's nuclear program and the lifting of sanctions on Iran. Tasnim, Iran's semi-official news agency, reported that the possibility of a breakdown in negotiations remains because the US has not accepted some key provisions.

The latest Middle East conflict escalated after US and Israeli strikes on Iran in February. Since then, damage to oil and gas infrastructure in the Persian Gulf has fueled concern over supply disruptions among major producers.

The Strait of Hormuz is a critical shipping route that handles about 20% of global crude oil and liquefied natural gas cargo flows. If the waterway returns to normal operations, the burden on major Asian oil importers including China, Japan, South Korea and India could ease.

Kevin Hassett, director of the White House National Economic Council, told Fox News that energy prices could plunge if an agreement is reached with Iran. That would also give the Federal Reserve more room to cut interest rates.