Brent crude plunged more than $6 per barrel Tuesday morning, falling from $107.24 to $100.80 before recovering to around $104 shortly after 10 a.m. Eastern, as traders reacted to a succession of conflicting reports about U.S.-Iran peace negotiations.
The selloff followed Monday’s 7.6% decline, which left Brent at $104.77. Prices initially rebounded overnight after reports of U.S. strikes on Iran’s Qeshm Island, near the Strait of Hormuz, before reversing sharply Tuesday morning.
The first abrupt decline began moments before a Bloomberg-attributed breaking headline announcing that Iran’s supreme leader had authorized negotiations on previously non-negotiable issues.
But that was a stronger claim than Iranian President Masoud Pezeshkian’s statement that the supreme leader had only granted the government additional negotiating authority. Pezeshkian had not specified which issues might be discussed.
Questions subsequently emerged about whether the Bloomberg headline accurately reflected the Iranian statement.
Brent suffered another steep drop around 8:20 a.m, right around the time of an Al Jazeera report that Washington had approved a draft agreement presented through Qatari mediators.
Additional reports surfaced that Washington and Tehran had made concessions involving Iran’s nuclear program and frozen assets, citing Al Araby Al Jadeed. The Al Araby report described a proposed exchange of Iranian nuclear concessions for the release of frozen funds.
But a senior Iranian official has rejected the claim that there was a breakthrough over concessions, and clarified that an agreement was indeed still far off. Tehran’s public position has been and still is that its conditions must be met before Hormuz can reopen, and nuclear negotiations can begin only after those are met.
In other words, nothing substantial has officially changed.
Qatar confirmed that both sides were reviewing proposals, and no agreement has been announced.
The competing reports help explain the uncertainty surrounding Tuesday’s trading, although they do not establish what caused either sharp decline. Momentum trading and automated orders may have amplified the moves.
By midmorning, Brent had recovered nearly $3 from its session low. The reported diplomatic breakthroughs remain unverified, and the Strait of Hormuz remains restricted.
By Julianne Geiger for Oilprice.com
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