The US and Iran are preparing to formally sign an interim peace deal in Switzerland on Friday. This memorandum of understanding to reopen the Strait of Hormuz has spurred optimism regarding an increase in oil flows from the oil-rich region, with both sides claiming victory.
Brent oil fell below $80 a barrel for the first time in more than three months, marking its lowest level since the start of the Iran war and the lowest point since early March. This decline has erased the bulk of the gains seen during the conflict, although some overnight futures reflected a more cautious stance, sliding to $82.90 a barrel.
The prospect of revived regional output and boosted supplies has led to a weakening of Middle Eastern crude markets. Leading Wall Street banks have responded by reducing their price forecasts, with Morgan Stanley making substantial cuts to its projections for the coming quarters.
Despite the downward trend in prices, oil traders and shippers remain unsure over how quickly the Strait of Hormuz will actually reopen. Crude futures continue to retreat as the market anticipates that the deal will eventually unleash a wave of supply.