US-Iran peace deal: Oil prices surged on Monday, 22 June, after President Donald Trump warned of possible military action against Iran if Hezbollah continues its attacks on Israel, fueling concerns that ongoing peace negotiations between Washington and Tehran could face setbacks.
Brent crude rose by as much as 2.2% at the market open, reaching $82.30 per barrel, while West Texas Intermediate climbed above the $78 mark, on Monday.
Why are crude oil prices rising today?
Negotiations faced an uncertain start on Sunday after Iranian media reported that Tehran had suspended talks in Switzerland following a warning from Trump. However, sources familiar with the discussions said the negotiations continued. Iran also accused Israel of breaching the ceasefire in Lebanon.
The high-level discussions at the Swiss resort of Bürgenstock mark the beginning of a 60-day negotiation period initiated after Trump signed a memorandum of understanding last week aimed at easing tensions. Although Iran claimed once again to have shut the Strait of Hormuz, oil shipments through the crucial waterway continued largely uninterrupted over the weekend.
According to a Bloomberg report, negotiations extended into the early hours of Monday and focused on issues such as safeguarding navigation through the Strait of Hormuz and ensuring compliance with the ceasefire between Israel and Hezbollah in southern Lebanon.
Trump was quoted as saying by Fox News that he had warned Iranian leaders that any attempt to close the Strait of Hormuz would carry severe consequences, stating that they would not make it back to Iran.
Meanwhile, crude oil prices have retreated in recent weeks, though they remain above pre-conflict levels. The decline has been driven by refiners finding temporary alternatives and growing optimism that an eventual resolution to the conflict could pave the way for a swift normalization of global energy markets.
“The renewed uncertainty has pushed crude oil prices modestly higher, a development that could weigh on sentiment in the near term. Investors are likely to remain focused on further headlines from the negotiations, as any signs of progress or escalation could have a significant impact on energy prices and broader market sentiment. Crude oil prices have edged higher and are currently trading in the $77–78 per barrel range after recently declining to around $73 per barrel,” said Ponmudi R, CEO of Enrich Money.
(With inputs from agencies)
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