Oil prices continue to fall: the main reasons
7 May 15:09
Oil prices began to fall on Thursday, May 7, following news of negotiations on a peaceful resolution to the Middle East conflict. This is reported by "Komersant Ukrainian", citing Interfax-Ukraine.
The price of July Brent futures on the London ICE Futures exchange, as of 10:30 a.m. local time, stands at $98.82 per barrel, which is $2.45 (2.42%) lower than at the close of the previous trading session.
WTI crude oil futures for June on the New York Mercantile Exchange (NYMEX) have fallen by $2.22 (2.33%) to $92.86 per barrel.
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Washington has sent Iran a one-page memorandum of intent that could lead to the gradual resumption of shipping through the Strait of Hormuz, Bloomberg reports, citing informed sources. Iran is expected to respond to this document in the coming days.
READ ALSO: Oil Prices Continue to Fall: Key Factors Behind the Decline
U.S. President Donald Trump previously suggested that a deal with Tehran could be reached before his trip to China in mid-May. Trump’s visit to Beijing, during which he is scheduled to hold talks with Chinese President Xi Jinping, is set for May 14–15.
“The drop in oil prices once again points to excessive and premature optimism. The only thing that matters to the market is the procedure and timing for reopening the Strait of Hormuz,” noted Vanda Insights founder Vandana Hari. “At present, this prospect is nothing more than a vague shadow on the horizon.”
Oil Prices: U.S. Forecast
U.S. Treasury Secretary Scott Bessent stated that oil prices will decline by the end of 2026. Moreover, the decline could begin very soon.
According to the minister’s estimates, oil prices will begin to fall within the next 3–9 months. He said this will be facilitated by the United Arab Emirates’ withdrawal from OPEC, after which the UAE is likely to increase production volumes.
“The UAE has decided that OPEC is not right for them. Most monopolies eventually collapse under their own weight. This gives me great optimism; oil prices after this conflict will be significantly lower than they were… at the beginning of the year or at any point in 2020–2025… I think that oil prices… (will be—ed.) lower in three, six, or nine months,” Bessent said.
Another factor in this forecast is the minister’s assumption that oil currently stranded in the Middle East due to the blockade of the Strait of Hormuz will enter the market in the near future.
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