Oil and Gas Extend Slide on Optimism Over US-Iran Peace Deal

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Oil and Gas Extend Slide on Optimism Over US-Iran Peace Deal.

commodities :: 6hrs ago :: source - bloomberg

By Alex Longley and Nicholas Lua

(Bloomberg) -- Oil and gas extended declines on hopes that the US and Iran are close to a peace deal to end a war that has roiled energy markets.

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West Texas Intermediate fell as much as 5.1% to the lowest level in almost two months, while European gas futures shed as much as 8.4%. Iran’s semi-official Mehr News Agency said a 14-point draft deal between the US and Iran included the lifting of oil sanctions. It still requires approval by Iranian authorities, the report said.

President Donald Trump said earlier a peace deal with Iran could be signed as soon as the weekend, calling off previously announced strikes on the country.

Risks to shipping still remain in the Strait of Hormuz, with Fox News reporting US forces shot down two Iranian attack drones overnight that appeared to be targeting commercial vessels. Iran said the waterway would be closed to all types of ships following the most recent hostilities from the US, though there’s been a ramp up in the number of vessels leaving Hormuz in recent weeks.

The US president has previously insisted an agreement with Iran was within reach dozens of times, but none has yet materialized.

“It feels like the market is increasingly betting that both sides ultimately have more to lose from failure than compromise,” said Haris Khurshid, the chief investment officer at Chicago-based Karobaar Capital LP. “That doesn’t mean a deal is close. It just means the market no longer sees breakdown as the most likely outcome.”

Trump told reporters in the Oval Office that a signing could take place as soon as this weekend in Europe and that Vice President JD Vance would attend if it materializes. He also said Iran’s supreme leader had agreed to a deal, though he cautioned the pact was not finalized.

The Mehr report said that the US would withdraw forces from the area near Iran amd that Hormuz would reopen within 30 days. It cited a source close to the negotiating team.

--With assistance from Gabriel Levin.